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--Restricting Chinese Firms' USD Access Would Encourage Yuan
--State Council Advisor Wang Huiyao Tells MNI Beijing Could Promote Yuan
BEIJING(MNI) - Any U.S. move to limit Chinese access to dollar transactions
in response to China's extension of its security laws to Hong Kong would only
prompt Beijing to accelerate its international drive to encourage use of the
yuan, an advisor to China's top administrative body told MNI.
"China may be affected in the short term. But China would step up its
international promotion of the yuan through its Belt and Road initiative, and
even promote an international yuan settlement system. Europe wouldn't stand in
line with the U.S. on this either," Wang Huiyao, president of the Center for
China and Globalization and advisor to the State Council, said in an interview
Such a move would also undermine the U.S. dollar's status as the leading
global reserve currency, Wang said, speaking before a fresh escalation of
tensions as the U.S. ordered the closure of China's consulate in Houston.
President Donald Trump's retaliation over Hong Kong was prompted by
electioneering, he said.
"The current U.S. administration, including his staff, advisors and China
hawks, actually has one over-arching purpose, which is to get re-elected," Wang
said, "Attacking China is expected, and it will become very crazy in the next
four to five months. But it will ease after the election."
The faster recovery by Asian economies than their western counterparts from
Covid-19 also blunts the impact of U.S. measures, according to Wang.
"I don't think the measures will inflict much pain on Hong Kong and China,
especially as the city is not relying on the U.S. anymore," he said, adding "The
U.S. has 1,300 companies and nearly 90,000 U.S. citizens in Hong Kong, and its
trade surplus [with the territory] is the only one it has in Asia, so the moves
are actually hurting itself more."
Responses by other western countries to China's Hong Kong moves have been
relatively restrained, Wang said, pointing to the UK's move to suspend but not
scrap its extradition treaty with its former colony.
"I think the broad criticism will gradually ease once the countries see
that Hong Kong maintains its prosperity and its stability," Wang said.
Mainland tourists will return to the city, and Chinese companies delisted
from U.S. stock markets will list in Hong Kong, said Wang, who was dismissive of
a survey by the American Chamber of Commerce showing that 37% of business people
are planning to leave the city due to the law.
"Capital chases profits, so I don't think they will leave the place in the
Global coordinated sanctions following the suppression of student protests
in Tiananmen square in 1989, were much more serious than the response to China's
policy in Hong Kong, Wang said, adding that the size and potential of China's
economy eventually lured multinational businesses back and foreign governments
resumed cooperation with Beijing.
Trump said last week the U.S. would revoke Hong Kong's special trade
status, barring exports of sensitive technology the region, furthering
constraining the availability of those technologies to China. The U.S. president
also signed the Hong Kong Autonomy Law, which would permit sanctions against
Chinese officials and restrict financial institutions' access to dollar
--MNI London Bureau; +44 203 865 3829; email: email@example.com
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