China renews focus on financial self-reliance

The war in Ukraine has added urgency to its plans to internationalise the yuan and establish an alternative inter-bank messaging service

“If the West cripples Russia, China could be next.” This is a stark warning from a Chinese commentator. There is shock over the freezing, at a stroke, of nearly $300 billion of Russia’s $630 billion of foreign exchange reserves and the cutting off of most Russian banks, including its Central Bank, from the SWIFT inter-bank messaging service through which most international banking transactions are routed.

The rapidity with which Russia has been unplugged from the global economy, in particular, from the global financial system, has shaken Chinese policymakers. The ongoing Ukraine war has highlighted the acute risks China continues to