Business China was frightened of the financial iron curtain: State...

China was frightened of the financial iron curtain: State Economy: Economy: Lenta.ru

The deterioration in relations with the United States has caused fear in China about the escalation of the financial war. It can lead to the fact that the second economy in the world will be disconnected from the dollar-based payment systems. Writes about it Reuters.

Chinese officials and economists have been debating worst-case scenarios in recent months. They call for strengthening the yuan’s influence in global markets in order to reduce dependence on the dollar and not be behind the financial iron curtain. In the first quarter, the yuan’s share in world foreign exchange reserves exceeded two percent.

“The financial war has already begun, but the deadliest tactic has yet to be used,” said Yu Yongding, an economist at the Chinese Academy of Social Sciences (CASS). The toughest sanctions could be aimed at seizing Chinese assets in the United States.

The volume of the US national debt bought out by the PRC is equal to a trillion dollars. Analysts believe that any move by Washington to disconnect China from the dollar system or Beijing’s retaliation to sell a significant portion of the debt could shake financial markets and damage the global economy.

The sale of government debt in such large quantities will lead to a decrease in its value and an increase in profitability. This will complicate further borrowing, which will be more expensive to maintain.

Earlier it became known that Russia became abandon the American currency as part of the “de-dollarization” of the economy. For example, a country receives more euros than dollars in export settlements with China.

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