US to ban Huawei from dollar system is more of a threat

By Chi Jingyi and Qi Xijia Source:Global Times Published: 2019/12/4 21:18:41

A Huawei Atlas 800 AI server is on display during a press preview for the 2019 World 5G Convention in Beijing, capital of China, Nov. 20, 2019. The 2019 World 5G Convention will open here on Nov. 21. (Xinhua/Peng Ziyang)

The US is reportedly considering banning Huawei from the US-dollar dominated global transaction system, but Chinese analysts said such a sanction is unlikely as the gains may not be worth the losses.

The US will probably place Huawei on the Treasury Department's Specially Designated Nationals list, which would make it impossible for Huawei to complete transactions in US dollars, according to a Reuters report on Tuesday.

"The US plan is more of a threat," said Ma Jihua, a veteran industry analyst, noting that "if it had been really easy, the US would have already done it."

Another analyst also said that the US will carefully consider the implementation of the act. 

"If companies like Huawei withdraw from the dollar system, it will also weaken the role of the dollar in the international financial system," Ma Ben, assistant professor of Capital University of Economics and Business, told the Global Times.

He added that it will be difficult to shake the dominant position of the US dollar in the short term, but all countries are working hard toward the target of de-dollarization.

"This is indeed a possible sanction, which, if implemented, would have a significant impact on Huawei as it sells and purchases globally and a large part of its business is settled in US dollars," Ma Jihua told the Global Times on Wednesday, adding that China will support Huawei with its sufficient foreign exchange reserves, if the US plan is implemented.

China's foreign exchange reserves stood at more than $3.1 trillion at the end of October, according to the State Administration of Foreign Exchange.

To ease the impact, Huawei should switch to other payment currencies as much as possible, Ding Meng, a senior strategist at Bank of China's Macao branch, told the Global Times.

"It is a must for China to phase in a yuan settlement system, backed up with more yuan offshore centers," said Ding.

The technology giant has already begun its diversification as it has business operations in more than 100 countries and regions around the world, including product sales, service business and research and development centers.


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