The Global Times is out again in the past 24 hours with continued defensive rhetoric against the US and some other country’s criticism of the Chinese regime. In an article for which purpose is to rebuttal some of the recent accusations in an escalation of a war of words between the US and China especially, the editors note goes as follows: Editor’s note Some US politicians have been relentlessly pursuing an escalation in tension with China for the sake of short-term political interests, even at the cost of the US’ leading financial position in the world. With the Trump administration claiming to announce a “strong response” this week to intervene in China’s domestic legislation, as well as recent US politicians’ insults about Chinese companies listing on American stock markets, global investors are concerned that the US might start a “financial war” with China. In interviews with the Global Times, two Chinese economists noted that although a comprehensive financial war is not likely, conflicts is inevitable due to US politicians’ political schemes, which will hurt China but will also damage US financial sectors. Dong Shaopeng, an adviser to the China Securities Regulatory Commission and senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China made some key points as follows: Financial conflict between China and the US is inevitable given that the coronavirus pandemic has weighed on the antagonistic atmosphere globally. If the US starts a “financial war,” it will only lead to damage for both sides. The US’ long-arm jurisdiction is not acceptable. Not to mention that trying to launch financial restrictions to achieve its political goals will only lead to deadlock and conflict. Although China’s financial sector has its shortcomings, it has now developed into a complete system to resist risks and serve its real economy. Defending itself from the US-initiated financial conflict would not be a problem. Author’s note: However, should there be a capital flight from Hong Kong and a collapse of the financial system and HKD, one has to ask where would that leave China which is heavily invested in Hong Kong? Xi Junyang, professor at the Shanghai University of Finance and Economics key notes: There is still a risk that the US side may take extreme measures to heat up its conflict with China in financial sectors due to certain politicians’ agendas. There’s no denying that China is in a weak position in the global financial market and will be hurt by a financial conflict. Launching financial restrictions on China will not bring any benefits to the US. It is generally a political scheme by the US government and politicians trying to win an election by blaming everything on China and further stirring up an antagonistic atmosphere so as to misdirect public opinion. China-US bilateral financial cooperation has been generating benefits for both sides. If the US recklessly escalates the financial conflict, it is hard to forecast how far the US government will go, and extreme scenarios involving drastically reduced financial ties with China are possible. It will be a lose-lose choice, but it will not hurt China’s overall economy. It may be an opportunity for China to speed up the internationalization of its currency, the yuan, amid cooling relations with the US. Authors note: internationalization of the yuan is NOT in the USA’s agenda. The US gains an exorbitant privilege from the dominance of the dollar for which has never mattered more than right now. ever since 2008, China has been promoting the use of the renminbi abroad. The then-Governor of the People’s Bank of China, Zhou Xiaochuan, criticized the existing international monetary system when he called for a new international reserve currency “disconnected from economic conditions and sovereign interests of any single country.” A missing part in all of these economists points of view is Hong Kong. HK plays a critical role in renminbi internationalization and this current situation will likely strip HK of its financial centre staus which would have a sizable effect on the global standing of the renminbi. More on this here: China’s plan of national security law in Hong Kong puts Trump in an unwelcome spot with Xi and here: The Hong Kong Dollar, the next black swan? As discussed in the following Chart of the Week analysis from the open of this week, US and Chinese tensions are at the forefront of markets. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Aussie CAPEX Q1: -1.6 PCT QoQ vs -2.6 PCT FX Street 3 years The Global Times is out again in the past 24 hours with continued defensive rhetoric against the US and some other country's criticism of the Chinese regime. In an article for which purpose is to rebuttal some of the recent accusations in an escalation of a war of words between the US and China especially, the editors note goes as follows: Editor's note Some US politicians have been relentlessly pursuing an escalation in tension with China for the sake of short-term political interests, even at the cost of the US' leading financial position in the world. 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