If the Chinese knew that this was part of the UNSC deal, and agreed to it anyway, then they would have been ready for this. But if the US didn’t let on, then this will be seen as a dirty trick deserving of retaliatory sanctions.
Either way, this will be a catastrophic disruption for the world economy, and the US economy in particular – within 3 weeks the Walmart shelves will be empty of cheap Chinese manufactured goods, and US manufacturers will have to gear up for a massive load of production. Then we will see if they are as dynamic and entrepreneurial as Trump believes. I very much doubt that they are.
So the shelves will soon be empty of all sorts of cheap Chinese products, or full of expensive US stuff, if you’re lucky.
China is ready to withstand being “cut off” from SWIFT, having written the software for its own SWIFT system (CIPS). The SWIFT system’s interface is internationally standardised, so they only have to write the equivalent code and issue their own set of credentials for accessing the system. Russia also has had its own system (RosSWIFT) up and running for Russian banks for months, and is ready to internationalise.
China also has the potential to crash the US Treasury bond market, being the biggest foreign investor in them. Of course they will take a financial loss if they just dump them on the market, but these bonds are never going to be paid back with real money anyway, so what the hell. Alternatively, they could slowly sell them down, day by day depressing the price unless the Fed tries to buy them all at the support price, and adding a trillion dollars to their debt. This will scare Japan and other big investors out of the bond market, with unknown consequences.
This is likely backfire on the US Empire, and is indicative that The End is Nigh for the Dollar.
US threatens to ‘cut China off’ from dollar if it does not uphold sanctions against N. Korea
“North Korea economic warfare works,” Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. “We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us.”
The Treasury Secretary echoed the words of the US envoy to the UN, Nikki Haley, by calling the fresh round of sanctions against Pyongyang “historic.” Mnuchin added “if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system.”
Washington has, so far, been reluctant to impose economic sanctions on China over concerns of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy.
Washington runs a $350 billion annual trade deficit with Beijing. China also holds $1 trillion in US debt, which amounts to 28 percent of US Treasury bills, notes and bonds held by a foreign government.
US lawmakers, however, seemed to be more inclined to exert pressure on Beijing and other countries striking deals with Pyongyang as they demand a “supercharged” response to North Korea’s nuclear tests, including imposing sanctions on companies from China and any other country doing business in North Korea.
“I believe the response from the United States and our allies should be supercharged,” said Ed Royce, chairman of the House of Representatives Foreign Affairs Committee during a hearing Tuesday.
“We need to use every ounce of leverage… to put maximum pressure on this rogue regime,” he said, adding that “time is running out.” Royce also called on Washington to target major Chinese banks, including the Agricultural Bank of China and the China Merchants Bank for dealing with Pyongyang.
The committee chair went on to say the US could give Chinese banks and companies “a choice between doing business with North Korea or the United States.” He added that the US should also “go after banks and companies in other countries that do business with North Korea the same way.”
Committee members also expressed unease over the fact that the sanctions imposed on North Korea have so far been ineffective in preventing Pyongyang from developing its nuclear and missile programs.
“We’ve been played by the Kims for years,” Republican Representative Ted Poe said, referring to North Korean leader Kim Jong-un and his predecessors, as reported by Reuters.
President Donald Trump also downplayed the role of the newly adopted sanctions later Tuesday. ”We think it’s just another very small step, not a big deal. I don’t know if it has any impact,” he told reporters at the start of a meeting with Malaysian Prime Minister Najib Razak.
Trump also said he already discussed the issue with his State Secretary of State Rex Tillerson. He ominously added that “those sanctions are nothing compared to what ultimately will have to happen” without specifying what he meant by that.
It also banned the North’s textile exports – the second-biggest export for the country, which totals $752 million – according to data from the Korea Trade-Investment Promotion Agency. Chinese and Russian negotiators managed to persuade the US delegation not to impose a travel ban or asset freeze on North Korea’s leader Kim Jong-un.
On Tuesday, the North Korean ambassador to Moscow said sanctions will not make his country change its policies. Pyongyang’s nuclear program helps it to deter the “hostile policy of the US,” Kim Yong-jae added.