Recently, according to informed sources, the China Banking and Insurance Regulatory Commission (CBIRC) has “suggested” that domestic major banks suspend lending to five refineries sanctioned by the United States. Although loans already issued remain valid, these new loans have been instructed not to be continued. Although it is a “suggestion,” in a China where the central government’s bureaucracy largely controls the assets of the bourgeoisie, a “suggestion” is not very different from an order. The CBIRC’s current concession stands in sharp contrast to its earlier hard stance in publishing the so-called “Blockade Decree” (Measures for Blocking the Extraterritorial Application of Foreign Laws and Measures, hereinafter the “Blockade Measures”), which demanded that Chinese enterprises refuse to acknowledge and implement U.S. sanctions.
Previously, the five Chinese refineries, led by Hengli, had accumulated substantial purchases of Iranian oil and were placed on the U.S. government’s Specially Designated Nationals (SDN) list. Assets of entities on the list within the United States and assets controlled by U.S. firms will be frozen, and any entity must have no financial or trade dealings with listed entities, or it will also face “secondary sanctions,” i.e., being added to the list as well.
Because China’s major banks overseas hold substantial investment and lending operations, and CBIRC now must rely internationally on the U.S.-led monetary and financial system, the consequences of U.S. sanctions would be catastrophic. Today, CBIRC’s domestic economy is in a slump, and it can only rely on external investment and exports to survive. U.S. sanctions on China’s banks would deal a severe blow to China’s outward investment and trade, triggering a domestic production and capital overhang crisis. This is because, in the financial sphere, banks are the lifeblood of industrial capital, providing continuous capital input for the expansion of industrial capital; China’s outward industrial capital relies on the support of Chinese banks. Once Chinese banks are sanctioned, China’s industrial capital will also be implicated, unable to expand abroad—no one will buy China’s goods, no country would accept its factories, and its outward investment would lack loan funding. In order to salvage China’s deteriorating economy, CBIRC, after some show and pretense, could only quietly issue orders to Chinese banks and obediently comply with U.S. sanctions.
CBIRC’s submission shows that it still cannot rival the American empire in international finance. Yet as the contradictions between China and the American empire grow sharper, such a situation cannot last. China is currently trying to promote the RMB-based settlement system under the international SWIFT clearance system and is attempting to establish the BRICS to replace the imperialist international monetary regime. In the future, when the contradictions between China and the U.S. empire intensify to a certain degree, in order to preserve its monetary and financial sovereignty, even at great cost, CBIRC will also try to sever financial ties with the U.S. empire to avoid being under its control.