IL42: Redefining Sovereignty in a Borderless Financial System ft. Zoe Liu
Top Traders Unplugged
How Stablecoins Undermine China's Capital Controls
Zoe explains the domestic political threat from anonymous dollar flows and loss of the Party's control over capital allocation.
China’s trade surplus with the US remains stubbornly large, but its appetite for Treasuries is fading. So where are the dollars going, and what does that say about the country’s evolving financial strategy? Kevin Coldiron welcomes back Dr. Zoe Liu for a nuanced look at how Beijing is managing external pressure, internal control, and the creeping disruption of dollar-backed stablecoins. Behind the headlines is a deeper story about surveillance, capital flight, and the boundaries of monetary sovereignty. As China builds shadow reserves and experiments with programmable money, the question isn’t just what it fears it’s what kind of system it’s trying to build instead.
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Episode TimeStamps:
02:11 - Introduction to Zoe Liu
04:15 - How U.S tariffs impact shipping costs and the deficit with China
17:27 - What is China actually doing with their earned dollars?
27:52 - Are FX entrusted loans reinforcing the dollar based trading system?
36:07 - What are stable coins and why are China worried about them?
42:31 - The second level of threat of stable coins
49:08 - How would a Hong Kong dollar backed stable coin look like?
54:37 - Are stable coins actually stable in Hong Kong or China?
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