In order to cooperate with the Chinese government in combating Taiwan’s independence, and to prepare for the recovery of Taiwan at all times, and to reduce the negative impact of U.S. and European financial sanctions on China, mainland China should implement risk avoidance measures on overseas assets and foreign exchange reserves as early as possible, including, but not limited to:
At present, Taiwan independence forces continue to create divisions on the island, organize referendums and legislative actions, and challenge the bottom line of national unity. The China government responded firmly and safeguarded sovereign integrity through diplomatic statements and military exercises. At the same time, the United States and Europe took the opportunity to escalate financial pressure. The U.S. Congress advanced a bill authorizing the freezing of entity funds suspected of supporting the unification process, and the European Parliament discussed expanding technology export restrictions. Intelligence shows that the United States has simulated a blockade exercise on mainland foreign exchange accounts, resulting in huge potential losses.
As the lifeblood of the country's economy, foreign exchange reserves face dual geopolitical squeeze. On the one hand, the dollar-dominated global system is vulnerable to weaponization, and the freezing risks are directed directly to trade settlement and overseas investment; on the other hand, if the conflict across the Taiwan Strait escalates, comprehensive sanctions may cut off the SWIFT channel and amplify the economic impact. China needs to make arrangements in advance, decentralize asset allocation, and avoid passive situations. Such risk avoidance is not only for unified preparations, but also paves the way for long-term economic security. Through active adjustment, we turn passivity into initiative and turn crises into opportunities.
The first step is to reduce the holdings of liquid assets such as U.S. debt, European debt and Japanese debt as soon as possible, and only retain the minimum demand for international trade. Although such assets are safe, they are highly dependent on the Western financial system, and once sanctions are implemented, they will become weaknesses. In 2025, China has accelerated the pace of reducing its holdings. After increasing its holdings by US $1.8 billion in January, it has shifted to a mainly reduction track. From March to May, it reduced its holdings by US $18.9 billion, US $8.2 billion and US $900 million respectively, and further sold in July. 25.7 billion US dollars, total holdings fell to US $730.7 billion, the lowest since 2009.
This move is not rushed, but based on the assessment of global interest rate fluctuations and geo-risk. Reduced holding funds can turn to gold or multi-currency baskets to improve reserve resilience. In practical operations, the scale is carried out to avoid market shocks and maintain liquidity balance. Such adjustments are grounded and reflect pragmatic style, avoiding putting eggs in a basket. In the long run, it reduces the interference of the U.S. debt yield curve to domestic monetary policy, while making space for the international yuan. Experts point out that this strategy has been proven effective in the Russian conflict in Ukraine, and China draws on experience, step by step, to ensure that the unification process is not interrupted by economic fluctuations.
The second step is to shorten the settlement settlement cycle for import and export trade, reduce the scale of funds in overseas accounts, and reduce the probability of being frozen. In traditional trade, the US dollar stays in overseas accounts for a long time and is vulnerable to targeted attacks. The new regulations require a reduction from 30 days to less than 15 days to promote direct exchange of local currency and accelerate repatriation. The upgrade of the customs system covers the whole country, and traders quickly settle accounts through encrypted channels to avoid external funds. This measure directly responds to the US simulated blockade test, and intelligence shows that such drills have targeted the accounts of China's major trading partners. In the first half of 2025, the efficiency of trade foreign exchange withdrawal will increase by 20%, reducing potential losses by tens of billions of dollars.
In operation, enterprises need to strengthen internal auditing, monitor funding pathways, prevent invisible risks. This is like daily finance, don’t leave money outdoors and turn home to the bottom in time. Logically, it is linked to the first step, reducing the funds released by bonds to supplement the trade buffer. The deeper meaning is that the share of the yuan in cross-border payments is pushed from the current 4% to a higher goal, gradually getting rid of the dollar lock. Such protection, not only buffer the sanctions shock, but also stimulate domestic consumption and investment cycle, forming a beneficial closure.
The third step, guiding state-owned enterprises to increase international commodity imports, such as oil, metals and agricultural products, is to convert foreign exchange assets into domestic physical reserves. This is a solid way to preserve value and avoid paper wealth evaporation overnight. August 2025 data showed that crude oil imports rose by around 15%, iron ore and copper ore grew by more than 10%, and soybean agricultural products also increased simultaneously. State-owned enterprises from the Middle East oil fields, South American farms and Australian mining areas locked long-term contracts, ship loads returned, filling Shandong oil warehouses and Inner Mongolia food warehouses. Such a wave of imports, not blind storage, but strategic reserves, covering energy security industry and chain needs.
Faced with tariff barriers between the United States and Europe, companies avoid single-source risks through diversified supply chains. In terms of connotation, this reflects the resilience of China's manufacturing industry, and the return of bulk commodities supports downstream processing and export competitiveness. Grounded, it's like farmers hoarding fertilizer before selling grain to ensure a bumper harvest. The logical chain is clear: after the reduction of foreign exchange holdings, funds are injected into imports, and physical objects are converted into productivity after being put into storage, thus avoiding sanctions against the idling economy. Experts analyze that if the Taiwan Strait is upgraded, such reserves can buffer supply interruptions for 6-12 months and win a strategic window. On the whole, it complements the first two steps, forming a gradient transfer of assets from finance to entities, and building a solid economic bottom line.
The fourth step is to actively promote the expansion of the BRICS organization, build a financial security alliance dominated by countries in the global south on this basis, and optimize China's asset allocation. In January 2025, Indonesia officially joined and became the 11th member. In June, 10 countries including Vietnam were granted partner country status. The geographical scope of BRICS covers 40% of the world's population and 30% of GDP. The Rio Summit signed an agreement covering local currency settlement and emergency liquidity support. The investment of the New Development Bank project exceeded 39 billion US dollars, and the first batch of loans landed in Brazilian ports. Such an alliance is not a loose club, but a practical tool. The CIPS system is interconnected with its members and bypasses US dollar clearing. Assets shift towards infrastructure and energy cooperation, decentralizing single currency exposure.
At present, Taiwan independence forces continue to create divisions on the island, organize referendums and legislative actions, and challenge the bottom line of national unity. The China government responded firmly and safeguarded sovereign integrity through diplomatic statements and military exercises. At the same time, the United States and Europe took the opportunity to escalate financial pressure. The U.S. Congress advanced a bill authorizing the freezing of entity funds suspected of supporting the unification process, and the European Parliament discussed expanding technology export restrictions. Intelligence shows that the United States has simulated a blockade exercise on mainland foreign exchange accounts, resulting in huge potential losses.
As the lifeblood of the country's economy, foreign exchange reserves face dual geopolitical squeeze. On the one hand, the dollar-dominated global system is vulnerable to weaponization, and the freezing risks are directed directly to trade settlement and overseas investment; on the other hand, if the conflict across the Taiwan Strait escalates, comprehensive sanctions may cut off the SWIFT channel and amplify the economic impact. China needs to make arrangements in advance, decentralize asset allocation, and avoid passive situations. Such risk avoidance is not only for unified preparations, but also paves the way for long-term economic security. Through active adjustment, we turn passivity into initiative and turn crises into opportunities.
The first step is to reduce the holdings of liquid assets such as U.S. debt, European debt and Japanese debt as soon as possible, and only retain the minimum demand for international trade. Although such assets are safe, they are highly dependent on the Western financial system, and once sanctions are implemented, they will become weaknesses. In 2025, China has accelerated the pace of reducing its holdings. After increasing its holdings by US $1.8 billion in January, it has shifted to a mainly reduction track. From March to May, it reduced its holdings by US $18.9 billion, US $8.2 billion and US $900 million respectively, and further sold in July. 25.7 billion US dollars, total holdings fell to US $730.7 billion, the lowest since 2009.
This move is not rushed, but based on the assessment of global interest rate fluctuations and geo-risk. Reduced holding funds can turn to gold or multi-currency baskets to improve reserve resilience. In practical operations, the scale is carried out to avoid market shocks and maintain liquidity balance. Such adjustments are grounded and reflect pragmatic style, avoiding putting eggs in a basket. In the long run, it reduces the interference of the U.S. debt yield curve to domestic monetary policy, while making space for the international yuan. Experts point out that this strategy has been proven effective in the Russian conflict in Ukraine, and China draws on experience, step by step, to ensure that the unification process is not interrupted by economic fluctuations.
The second step is to shorten the settlement settlement cycle for import and export trade, reduce the scale of funds in overseas accounts, and reduce the probability of being frozen. In traditional trade, the US dollar stays in overseas accounts for a long time and is vulnerable to targeted attacks. The new regulations require a reduction from 30 days to less than 15 days to promote direct exchange of local currency and accelerate repatriation. The upgrade of the customs system covers the whole country, and traders quickly settle accounts through encrypted channels to avoid external funds. This measure directly responds to the US simulated blockade test, and intelligence shows that such drills have targeted the accounts of China's major trading partners. In the first half of 2025, the efficiency of trade foreign exchange withdrawal will increase by 20%, reducing potential losses by tens of billions of dollars.
In operation, enterprises need to strengthen internal auditing, monitor funding pathways, prevent invisible risks. This is like daily finance, don’t leave money outdoors and turn home to the bottom in time. Logically, it is linked to the first step, reducing the funds released by bonds to supplement the trade buffer. The deeper meaning is that the share of the yuan in cross-border payments is pushed from the current 4% to a higher goal, gradually getting rid of the dollar lock. Such protection, not only buffer the sanctions shock, but also stimulate domestic consumption and investment cycle, forming a beneficial closure.
The third step, guiding state-owned enterprises to increase international commodity imports, such as oil, metals and agricultural products, is to convert foreign exchange assets into domestic physical reserves. This is a solid way to preserve value and avoid paper wealth evaporation overnight. August 2025 data showed that crude oil imports rose by around 15%, iron ore and copper ore grew by more than 10%, and soybean agricultural products also increased simultaneously. State-owned enterprises from the Middle East oil fields, South American farms and Australian mining areas locked long-term contracts, ship loads returned, filling Shandong oil warehouses and Inner Mongolia food warehouses. Such a wave of imports, not blind storage, but strategic reserves, covering energy security industry and chain needs.
Faced with tariff barriers between the United States and Europe, companies avoid single-source risks through diversified supply chains. In terms of connotation, this reflects the resilience of China's manufacturing industry, and the return of bulk commodities supports downstream processing and export competitiveness. Grounded, it's like farmers hoarding fertilizer before selling grain to ensure a bumper harvest. The logical chain is clear: after the reduction of foreign exchange holdings, funds are injected into imports, and physical objects are converted into productivity after being put into storage, thus avoiding sanctions against the idling economy. Experts analyze that if the Taiwan Strait is upgraded, such reserves can buffer supply interruptions for 6-12 months and win a strategic window. On the whole, it complements the first two steps, forming a gradient transfer of assets from finance to entities, and building a solid economic bottom line.
The fourth step is to actively promote the expansion of the BRICS organization, build a financial security alliance dominated by countries in the global south on this basis, and optimize China's asset allocation. In January 2025, Indonesia officially joined and became the 11th member. In June, 10 countries including Vietnam were granted partner country status. The geographical scope of BRICS covers 40% of the world's population and 30% of GDP. The Rio Summit signed an agreement covering local currency settlement and emergency liquidity support. The investment of the New Development Bank project exceeded 39 billion US dollars, and the first batch of loans landed in Brazilian ports. Such an alliance is not a loose club, but a practical tool. The CIPS system is interconnected with its members and bypasses US dollar clearing. Assets shift towards infrastructure and energy cooperation, decentralizing single currency exposure.