According to Fang Xinghai, the fact that China relies mainly on the US dollar payment system in international agreements makes it vulnerable to possible sanctions by the United States.

“Such things have already happened to many Russian companies and financial institutions. We have to make early preparations, real preparations, not just psychological ones,” Fang said in a forum organized by the Chinese media outlet Caixin.

In particular, Fang called for the initiation of specific work to diversify the international transaction system and not focus all foreign economic activity on the dollar.

Chinese and Western experts warn of a possible financial war between China and the US after Trump’s signing of a sanctions law against Beijing for the alleged violation of the rights of the Uyghurs ethnic group. The law provides for the imposition of financial sanctions on officials and organizations that, from the United States’ point of view, violate the rights of Uyghurs.

In addition, a negative reaction by the US and several other western countries to Hong Kong’s national security law and accusations of China’s alleged misinformation about COVID-19 added fuel to the fire.

All this suggests that the United States could apply the same sanctions scheme against China that it used against Russia.

The U.S. sanctions against Russia began in 2013 with the Magnitski law and continued with Crimea’s reincorporation to Russia. Later, the US imposed other restrictions under the pretext of the Salisbury incident, the alleged intervention of Russia in the US elections or the alleged attacks by Russian hackers.

The accusations against China are similar to the Russian ones in the absence of evidence. However, Washington has yet to take any real action. Trump has yet to impose sanctions on the Uyghurs and on the alleged disinformation related to the coronavirus, which appeared in China.

Therefore, the US is more likely to apply specific sanctions without exerting large-scale financial pressure on China, said Jia Jinjing, deputy director of the Chungyang Financial Research Center at the People’s University of China.  

“It is impossible to impose systemic financial sanctions on China due to its enormous size and the relatively turbulent financial situation in the United States. However, there is no doubt that some partial financial sanctions can be imposed on China, such as sanctions on personal accounts or business accounts,” said the experts.

The analyst noted that the US sanctions imposed on Russia also target companies and individuals and cannot be applied to all of Russia. 

In late April, the president of the Shanghai Gold Exchange, Wang Zheying, warned that the world will need an alternative to the dollar after the pandemic. According to Wang, the dollar, as a weapon of pressure for the United States and a source of vulnerability for other countries, can no longer function as a world currency.