US cut off the US dollar supply of Chinese banks! ?

What will happen after the US cut off the US dollar supply of Chinese banks

The United States dollar has the property of world currency because it has the highest utilization rate in international trade. As of March 2020, the United States dollar accounted for 44.1 percent of international trade settlements, while the euro ranked second was only 30.84 percent. Now, however, the U.S. is intent on cutting its own arm from allowing Chinese banks to get dollars and use them to settle accounts, potentially jeopardizing its dominance.

The US bill's proponents envisage that, by the end of 2019, China's four largest state-owned banks had $1.1 trillion in dollar-denominated debt, due to foreign trade transactions and foreign investment by Chinese companies, a small difference from the size of their dollar assets, are facing a shortage of dollars. Cutting off the dollar would deprive Chinese banks of the possibility of using the international reserve currency and could even prevent Chinese companies operating overseas from settling dollars. At that time," China's foreign trade will naturally decrease ".

China is the world's second-largest economy, with a total import and export trade of 31.54 trillion yuan in 2019, and the huge scale of trade settlement has made the United States dare not cut off the supply of dollars. Because if the United States does not allow Chinese banks to use dollars, then the use of the dollar is likely to drop sharply, and its dominance will be seriously challenged.

 China is also the second-largest lender overseas. According to U.S. statistics, in April, China reduced its holdings of U.S. Treasuries by $8.8 billion to $1.0728 trillion. Once China decides not to use dollar assets, the hedging role of holding dollar bonds will also be meaningless. By then, China's massive sell-off of dollar assets is likely to bring the dollar-led international financial system to a standstill.

The process of RMB internationalization is accelerating. So instead of the dollar, the use of the renminbi, the euro and other trade settlements will rise, and the renminbi will accelerate internationalization. The Central Bank of Turkey announced on June 19 that companies that have paid for imports from China through the Bank since June 18 will be settled in renminbi. In addition, the world's three major iron ore giants have also achieved RMB settlement with Chinese enterprises. All foreign trade manufacturing enterprises, including our plastic injection molding company, hope to maintain good relations between China and the United States. Of course, it's a national event, not something we little people need to worry about. But now that China-US relations are so bad, it is only because the United States needs elections.