January 16, 2024

It’s Not Time to Hit China with Financial Sanctions — Yet

By: Emily Kilcrease and John Hughes

U.S. legislators are debating a range of new economic statecraft authorities aimed at managing the strategic competition with the People’s Republic of China. While Congress must move quickly to implement certain measures, such as those addressing risky U.S. outbound capital flows to the PRC, it would be a mistake to push for a full-scale eviction of Chinese entities from the global financial system.

Reaching for the nuclear option now costs the United States important coercive leverage that it may have a greater need for later.

The United States enjoys a robust set of policy tools for imposing national security-based restrictions on economic activity with China. This includes export controls that halt the flow of sensitive technologies, tariffs, and — in some cases — restrictions on the ability of U.S. persons to engage in financial transactions with Chinese counterparts. Of these, financial restrictions are used at a relatively low level, considering the scale of policy challenges that the United States has with China.

Read the full article from The Hill.

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