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Sanctions on Chinese Banks Would Unleash ‘Gargantuan Financial Instability’

April 24, 2024 (EIRNS)—Secretary of State Tony Blinken’s trip to China carries with it the threat of the U.S. sanctioning Chinese banks (see separate slug) or, more drastically, removing China from the Swift interbank financial system, although Blinken has not mentioned the latter publicly. As South China Morning Post indicated today, several sources are warning that U.S. sanctions on Chinese banks or removal of China from the Swift system, would unleash global financial instability—not to mention doing enormous damage to the already fragile U.S.-China bilateral ties.

China is a trading partner with much of the world. Financial sanctions would disrupt transactions in Europe and the U.S., some analysts note. Brian Wong, a fellow at the Center on Contemporary China, warned the U.S. “would be creating a gargantuan source of financial instability for not only China but also itself.” This could “severely impede the interests of American companies and investors in China, especially given the likely retaliation that would come either immediately or in due course.” Moreover, Wong added, removing China from the Swift system, represents a “nuclear option,” that would create a “significant logjam in transactions and clearing for trade, which would culminate in cost-push inflation across the board.”

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