Beijing has expressed intense displeasure over President Trump’s decision to sign into law a bill targeting senior CCP figures involved with China’s network of concentration camps, even though the White House ultimately held off on putting the sanctions into practice. Which is why it’s hardly surprising that senior financial regulators in Beijing are again echoing criticisms first formulated by Russian President Vladimir Putin amid growing fears that, next time, the sanctions won’t be just a “warning shot”.

But as President Trump threatens to leverage even more sanctions against the Chinese government as well as senior officials over transgressions like corporate espionage and illegal IP theft, one senior official has warned that it’s now ‘inevitable’ that the US will soon apply sweeping Russia-style sanctions to China.

Such brazen punitive sanctions would likely prove unpopular among Washington’s closest allies, especially at such a precarious time for the global economy. But they would certainly serve to accelerate the economic decoupling that White House China hawks like Peter Navarro and Matt Pottinger have hoped for. Which is perhaps why Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, warned on Monday that China’s reliance on the international dollar-based financial system makes it vulnerable.

Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions.

“Such things have already happened to many Russian businesses and financial institutions. We have to make preparations early – real preparations, not just psychological preparations,” Fang said at a forum organised by Chinese media outlet Caixin.

Fang’s comment came at a time when Washington is pondering how far it should go to use the US dollar’s key role in international payment to punish Chinese individuals, companies and financial institutions for alleged involvement in issues such as Xinjiang and Hong Kong.

At the same time, Fang said the value of the US dollar is facing an uncertain future due to additional money being printed by the US Federal Reserve, which poses risks to China’s holdings of US dollar-denominated assets. With this, Fang echoed criticisms posed just days ago by Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, who delivered a strong warning on the U.S. currency last week.

China is presently the second-largest holder of American Treasuries with more than $1 trillion in Treasury bills, behind only Japan. Though the paper profits from holding these assets are certainly massive, a reversal in interest rates could saddle the PBOC with massive losses over time, especially if rates move swiftly higher in a destabilizing way.

The solution, in Fang’s view, is to continue to expand the international use of the yuan by China’s trading powers, even as Beijing’s tight control of the currency remains a major obstacle to this: “Yuan internationalisation is a must to offset external financial pressure,” Fang added. “If our overseas assets were held in yuan, there won’t be such worries [over US dollar devaluation].”