Mapping the Futility of China’s Financial Decoupling From the U.S.

Confrontations in trade, technology and geopolitics are threatening to spill over into the financial system, with the U.S. pondering sanctions against Chinese banks and China weighing the possibility of selling down its U.S. Treasury holdings. Tensions might be high, but Bloomberg Economics’ mapping of China’s financial links with the rest of the world suggests the chances of decoupling are low. With the exception of foreign-currency reserves, China’s role in global financial flows is limited: International linkages of China’s private sector -- including direct and portfolio investment and bank flows -- accounted for just 2%-3% of the global total in 2018, far less than the U.S.