The dollar: China's Achilles heel

How Washington has an edge over Beijing

The second phase of the US dispute against China has been severely derailed by the Covid-19 crisis. Issues have become more contentious, and tensions have become more acute.

The US is determined to build an international coalition to isolate China. These efforts, however, will likely be frustrated, and the power struggle will likely remain a bipolar one for many years to come. The US might have more success if it focused on financial sanctions rather than its playbook approach of trade sanctions. China is significantly more vulnerable to the former than the latter. China's economy, unlike thse USSR half a century ago, is deeply intertwined with the rest of the world. Many regions run a substantial current account surplus against China. Swift recovery? ...