Singapore’s primary Chinese language newspaper, Lianhe Zaobao, recently reported that, according to internal sources from five major China state-owned banks, the Chinese banking industry is updating emergency plans in order to deal with potential new U.S. regulations that may add more sanctions against China after implementing the Hong Kong National Security Law. The Bank of China as well as the Industrial and Commercial Bank of China are preparing for the worst-case scenario which would be losing the source for obtaining U.S. Dollars or the potential of losing the clearing mechanism in the U.S. Dollar system. One source said that one never knows what will actually happen; it is better to hope for the best and prepare for the worst. A new U.S. regulation just passed both chambers (still pending Trump’s signature) which will allow the punishment of banks working with the individuals identified by the U.S. government as having helped destroy Hong Kong’s autonomy. The banks also considered the case of a run on the Bank of China, HK Branch, as well as the lessons that Iranian banks currently suffering from U.S. sanctions have learned. Some Chinese international equipment leasing companies are going through similar exercises.
Source: Lianhe Zaobao, July 10, 2020