China’s Quiet Economic Takeover: Sanctions are Backfiring on the West

Oct 27, 2024 | Economic Collapse | 0 comments

China’s economy is collapsing! That’s the drumbeat we’ve been hearing for months from mainstream media. The banks are closing, property is in freefall, and money is fleeing China—or so they say. But what if I told you that Beijing is in a far stronger position than most of us realize? China isn’t crumbling; in fact, it’s quietly reshaping global trade, finance, and industry.

So, why does this matter to you? Well, while we’re bombarded with talk of China’s downfall, their dominance in critical industries like electric vehicles and their growing financial clout tell a different story—one that has major implications for the global economy, your investments, and even the future of US-China relations. Stick around as we explore three key developments: China’s push to ‘de-dollarize’ trade, its rapidly expanding economic influence in global finance, and the real impact of sanctions on its relationship with Russia.

Let’s start with one of the biggest shifts happening today: China is moving away from the US dollar in its trade relationships. This might sound abstract, but it has huge implications. By settling trade deals in Chinese yuan instead of dollars, Beijing is essentially insulating itself from US sanctions. For example, nearly 95% of the trade between China and Russia is now conducted outside of the dollar. Why? Because the US weaponized the dollar when it froze Russia’s assets and kicked it off the SWIFT banking network after the Ukraine invasion. China took notice. Beijing knows it could face similar punishment if tensions escalate with the West. So, they’re building a financial firewall—paying for imports with yuan protects them from any potential US sanctions, allowing them to continue trading uninterrupted.

In fact, China’s share of cross-border payments in its own currency has crossed the 50% mark, meaning a majority of their international business is conducted in yuan. This isn’t just a way to sidestep sanctions; it’s a strategic power play. The more countries that trade with China in yuan, the less reliant the global economy becomes on the US dollar. That’s a huge threat to America’s financial dominance, which is built on the dollar being the world’s reserve currency. HSBC, a massive British bank, recently joined China’s cross-border interbank payment system (CIPS), signaling that even Western financial giants see where the future is headed. Simply put, global banks can’t afford to ignore China, especially when the Chinese economy has grown from 3% to nearly 18% of global GDP since the 2000s. In contrast, G7 economies like the US, EU, and Japan are all in decline. As Beijing tightens its grip on global finance, other banks will likely follow HSBC’s lead, positioning themselves to profit from China’s rise.

The second major development is the rapid growth of China’s financial system and its integration with other major economies, particularly in the Global South. While Western powers have been obsessed with decoupling from China, the reality is that China’s economic footprint is only getting bigger. Over half of China’s exports go to developing countries, and these economies are continuing to grow—countries like Vietnam, Indonesia, and even Australia are heavily reliant on Chinese imports. Banks like HSBC facilitate this trade by providing loans, credit, and insurance, all at lucrative interest rates. And as these economies expand, so will the demand for trade financing. Wall Street knows this, which is why banks are hesitant to fully cut ties with Beijing despite the political pressure to do so.

Meanwhile, China’s relationship with Russia has flourished in the wake of Western sanctions. In fact, this has been a boon for Beijing. Take natural gas, for example. While Europe was importing vast amounts of cheap Russian gas in 2022, China has now overtaken Europe as the largest buyer—and they’re getting it at a massive discount, between 20% and 30%. This cheap energy is critical for China’s manufacturing sector, which is now benefiting from lower costs while Europe is struggling with sky-high energy prices. Western companies like BASF are even relocating parts of their production to China because it’s simply cheaper. China has become the world’s factory for a reason, and now it’s using its access to discounted Russian energy to tighten its grip on global supply chains.

The final piece of this puzzle is the West’s own role in China’s rise. By weaponizing the financial system against Russia, the US inadvertently pushed China and Russia closer together. Chinese imports of Russian gas are surging, and Beijing is filling the vacuum left by Western sanctions. On top of that, China’s skilled, cost-effective workforce and dominance in supply chains across industries have cemented its place as an economic powerhouse. The International Monetary Fund (IMF) forecasts that China will lead global GDP growth through 2029, accounting for 21.7% of the total. Meanwhile, the US’s share is shrinking. If US strategies like sanctions and tariffs were truly working, shouldn’t China’s economy be in freefall by now? Yet, here we are, with Beijing still at the top of the list.

It’s clear that while the West might be trying to contain China, the economic trends tell a different story. Beijing’s rise isn’t just a fluke—it’s built on the West’s own missteps and China’s strategic decisions. From dominating trade in critical industries like electric vehicles to controlling the financial systems that underpin global commerce, China is positioning itself to weather any future storms. And with their growing ties to Russia and other emerging economies, they’ve built a network that’s too big to ignore.

So, what does this mean for the future? Will more banks join China’s financial system, further undermining the US dollar’s dominance? And with another US presidential election on the horizon, could we see even more aggressive trade wars? It’s hard to say for sure, but one thing is certain: ignoring China’s rise won’t make it go away.

Just sharing what’s happening in the news. Could this be the End of Dollar Supremacy? Curious to hear what you think. Drop a comment and follow the RTD YouTube Channel for more updates.

Read the latest RTD Blog:

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