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Chinese media could ‘project image’ that U.S. financial system is on a house of cards: Expert

Zongyuan Zoe Liu, Council on Foreign Relations Fellow for International Political Economy, joins Yahoo Finance Live to discuss the trade implications surrounding Chinese President Xi Jinping's meeting with Vladimir Putin in Russia, while also talking about how China can capitalize on the United States' financial uncertainty and potential TikTok ban.

Video transcript


DAVE BRIGGS: Chinese President Xi Jinping met with Russian President Vladimir Putin today for four hours. The Western world watching closely as the pair is expected to discuss trade political cooperation and, of course, the war in Ukraine over the next few days.


Joining us to discuss that meeting and what may come of it is the Council on Foreign Relations fellow for international political economy, the author of the upcoming book "Sovereign Funds-- How the Communist Party of China Finances its Global Ambitions," Zoe Liu. Nice to see you. What is Vladimir Putin's goal with Xi?

ZONGYUAN ZOE LIU: Thank you, Dave, very much for having me. I would say, probably, President Xi Jinping's goal and President Putin's goal are going to be very different. On the one hand, President Xi Jinping might be really interested in restore China's global image, whereas Putin might want to discuss a potential support that China could give Russia both in terms of economic financial as well as perhaps military support in the war.

SEANA SMITH: Zoe, how seriously do you think China and President Xi Jinping is considering that? When we talk about the timing of this coming just days after Vladimir Putin was charged of war crimes, how significant is that and really just shows who China lines up with right now in the global world?

ZONGYUAN ZOE LIU: Yes. Seana, thank you very much for the question. I think, you know, your highlighting of the timing is really an important issue. And from where I came from, I would say actually, this is not the first time that President Xi Jinping visited Moscow or met with-- met with Vladimir Putin, right? So he actually has visited Russia eight times since he came to power. And he has met with Putin on different bilateral and multilateral occasions for perhaps more than 40 times.

And so under normal circumstances, this meeting would not be a major news. But this time, exactly as you said, is different in the sense that, on the one hand, Putin is under international isolation. And he's wanted by the ICC. And then from Western observers perspective, Putin really is-- Xi Jinping's visit perhaps might signal that he is personally supporting Putin and perhaps that might be interpreted as a China's support to Russia.

But I would say, from China's perspective, this is very different, because Xi Jinping, as the Chinese media highlighted, is at the invitation of Putin to pay a reciprocal visit, following Putin's visit to China last year.

DAVE BRIGGS: Economically speaking, what does Xi have to gain from Vladimir Putin?

ZONGYUAN ZOE LIU: So I would say probably there are one thing, in particular, which is energy. And then related to that would it be the use of non dollar currencies in the pricing and the settlement of energy. So in the latest data shows that the trade of goods between China and Russia reached about $190 billion last year, which is about 30% growth compared with a year ago.

However, I would put this in the broader context of China's broader international trade, right? Because if you think about a US and China trade relationship, you know, that is significantly outpaced to what extent China can trade with Russia. The number of bilateral trade, a number between China and the United States was more than $600 billion. So from that perspective, really China's trade with Russia is not as much as it's significant.

However, if Xi Jinping-- we put this in the context of the sanctions and all that, perhaps the use of non-dollar currencies in international trade is very much of Xi Jinping's concern.

SEANA SMITH: Well, Russia and China appearing to deepen their ties. What does then all of this mean, though, for the US?

ZONGYUAN ZOE LIU: So, Seana, I think, you know, what I am really concerned about is that, you know, in the broader context, on the one hand, the US financial institutions, especially with all these discussions about SVB collapse and the misuse of [INAUDIBLE] loans, so basically what we are experiencing is perhaps there is an opportunity or even the threat that China might or Chinese media might make this image or project this image that the US financial system is built on a house of card and all that, hence trying to reduce international confidence in US financial-- in the US financial system or even dollar denominated assets.

So this gives China and Russia, as well as some other interested-- countries interest in promoting ways to bypass the US sanctions.

DAVE BRIGGS: Arguably, the biggest discussion here regarding China right now is a discussions over a potential TikTok ban. We're going to talk more about that later in the program. What is the Chinese perspective on that?

ZONGYUAN ZOE LIU: So that's an interesting issue to be honest, because, you know, Chinese foreign minister spokesperson sort of put a blush on to thing that that's nonsense and all that. However, I do think there is, because of China's data regulation and the establishing or the launch of a new data governance bureau at the center-- at the central government level, does raise serious concerns from Western perspective.

However, you know, to what extent TikTok really expose a systematic national security concern? That we do not know. However, the perception of the threat, because of the Chinese government potentially could compel companies to share their data with the government, that is a legitimate concern.

DAVE BRIGGS: Zoe Liu, appreciate all that very much. Thank you.