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China Media Say Dollar, SWIFT in Decline on Russia Sanctions

SWIFT will lose its credibility and influence and gradually decline in importance if it’s used as a sanctions tool, Xinhua says, while the digital yuan has a big future, another outlet said


The move to ban Russia from using SWIFT, the Western payments system, will cause more people to opt for alternative payment systems, Chinese state media says. Reuters file photo.

 

Chinese state media lost no time commenting about the impact on Sino-Russian relations as Western powers rounded on Moscow with a slew of hard-hitting sanctions after Vladimir Putin ordered his tanks into Ukraine.

The United States and Europe said on Saturday they would move to ban Russia’s major banks from the main global payments system, SWIFT, and announced a range of other measures to limit Moscow’s use of its $630 billion war chest.

But some Chinese media reports were quick to suggest the West’s economic attacks on Russia could ultimately be to Beijing’s benefit, with China’s currency gaining a significant advantage over its dollar rival and Moscow turning to China’s own payment system, the CIPS.

Here are four key points made by state media today:

 

Disintegration of Dollar Hegemony – Global Times 

Many companies, unable to bear the loss of cutting trade with Russia, will look for alternate ways of doing transactions that bypass the SWIFT system, China’s state-run tabloid said, citing experts.

Alternative methods include settling payments in currencies other than the US dollar or using SWIFT equivalents, such as Russia’s SPFS or China’s Cross-Border Interbank Payment System (CIPS). They could also opt for barter trade or using agent banks.

“If Russia is excluded from international energy settlements with most European nations, energy transactions between Europe and Russia can only be de-dollarised, and that will be the beginning of the disintegration of dollar hegemony,” Bocom International’s managing director Hong Hao told the tabloid.

 

SWIFT to Lose Credibility – Xinhua

SWIFT will lose its credibility and influence and gradually decline in importance if it’s used as a sanctions tool, Xinhua News Agency said, citing economist Guo Shengxiang.

Kicking some Russian banks out of Swift is not necessarily a “nuclear option” as Russia’s crucial energy exports are unlikely to be affected by the ban, Xinhua said. Many countries, including Russia and Iran, have developed their own equivalents of SWIFT, it added. The rising status of currencies from emerging markets will also help ensure the decline of SWIFT, it said.

 

West Can’t Be Allowed To Dominate – China Daily

An editorial in the China Daily said “Western voices cannot be allowed to dominate the voice of the international community” over Russia’s invasion of Ukraine because, it claimed, the US and NATO had helped instigate the crisis.

They argued the sanctions were not intended to punish Russia but aimed at engineering “internal turmoil and regime change.”

The Daily did accept, though, there is deep mistrust between Russia and Ukraine and called for a spirit of compromise and diplomatic flexibility if the crisis is to be resolved.

 

Abe’s Call a Return to ‘Militarism’ – Global Times

Returning to The Global Times, it lambasted former Japanese prime minister Shinzo Abe’s call to set up a nuclear-weapons sharing mechanism with the US in the wake of the crisis in Ukraine. The tabloid labelled Abe’s remarks a call to revive militarism.

Beijing also warned off Tokyo after rightist politicians proposed to ramp up Japan’s security help for Taiwan, after the island’s President Tsai Ing-wen put its military on standby after Russia attacked Ukraine. Tsai said she feared that Beijing would seek to exploit the “void” in Asia when the West becomes preoccupied with the crisis in Europe.

 

• Iris Hong and Frank Chen

 

ALSO on AF:

Chinese Payment Stocks Soar Amid SWIFT Curbs Against Russia

CIPS, China’s Onshore Yuan Clearing and Settlement System

US Warns Chinese Companies Against Evading Russia Sanctions

The Digital Yuan and Its Disruptive Potential

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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