China’s Digital Currency and US-China Relations
The US blocking China’s proposed digital currency efforts could be worse than the two large economies working together to establish global governance, manage the disruptions and harness the tech for global growth, a founding governor of Hong Kong Institution for International Finance has opined.
In a piece in the South China Morning Post, Edward Tse, who is also the founder of Gao Feng Advisory Company, suggests the world will benefit from the two leading economic powers working together to rebuild trust, establishing global governance and a code of conduct on blockchain technology applications, creating a hostile competition is likely to result in a zero-sum game.
Feng believes the adoption of China’s digital currency by more countries will make the oversight and regulatory role of the US in the global financial system challenging and widen the gap between the two countries as they head in separate trajectories of technology advancement.
The view aligns with Rae Deng’s, a partner at DU Capital who thinks China’s digital currency policy fits squarely in Xi Jingpin’s long-term plan for “industrialization of the digital economy”. On CNBC, she says the entry of China’s digital currency could effectively tip the scales in favor of new currencies worldwide and spur some traditional investors to give blockchain a second look. Another participant in the conversation, the managing partner at Proof of Capital, Edith Yeung, adds that China has signaled with its recent moves that it doesn’t want to over-regulate its digital currency but would “experiment” with it as a long-term investment so driving its adoption might be a way to ensure Chinese currency doesn’t lose value. She adds: “And I really think that the U.S. needs to hurry up. Otherwise, I think what China is doing is leading the way to drive more dominance for the renminbi for the world.”
Following President Xi’s recent endorsement and the affirmation by the Political Bureau of the CPC Central Committee, blockchain technology has seen renewed interest from various quarters. The stock prices of companies listed as blockchain-based soared – though it is now emerging that a majority of the 32,000 listed are not actually blockchain-based.
This recent buzz is coming as the first anniversary of the establishment of the Shenzhen Blockchain Industry Alliance approaches on Nov. 29. In their various ways, members of the alliance including enterprises, institutions, universities, industry media and associations that came together last year to commit to promoting blockchain technology research, application and industrial development, continue to explore the technology’s industry including Tencent which now has a virtual bank blockchain project license from the Hong Kong Monetary Authority. China’s forward-looking approach to blockchain and its digital currency initiative stands to benefit the alliance and others even further.
It’s been hinted that BRICS, the group of five major emerging nations – Brazil, Russia, India, China and South Africa – could be a major first inter-country link to China’s proposed digital currency. The bloc is reportedly considering creating its own digital currency too for settling payment transactions between the countries, according to the CEO of the Russian Direct Investment Fund, Kirill Dmitriev, who revealed the plan at the BRICS forum on Thursday Nov. 14.