There is a common sentiment among the world population that the US has dominated the world economy long enough and its time for them to step aside and allow another player to raise the flag. I’m talking about China and how they have decided to move away from US dominance by coming up very strong on areas related to blockchain, crypto assets and more recently, their digital Yuan.
According to a recent report, amidst the drastic changes happening all around the world, due to the COVID-19 pandemic, China announced in April this year (2020) that it is rolling out their central bank-backed digital currency on trials in 4 major cities:
- Xiongan New Area in north China’s Hebei Province,
- Shenzhen in south China’s Guangdong Province,
- Suzhou in east China’s Jiangsu Province; and
- Chengdu in southwest China’s Sichuan Province.
China said, it may also test the usage of their digital currency in some scenarios during the 2022 Winter Olympics Games in Beijing.
According to a statement by Yi Gang, the governor of the Peoples Bank of China said:
The roll out of central bank digital currency is conducive to efficiently satisfying people’s demands for legal tender under the digital economy, to improving the convenience, security and anti-counterfeiting level of retail payment, as well as accelerating development of the country’s digital economy.
Actually China has already been telling the world about their efforts and development of their the national digital currency, DCEP – (Digial Currency Electronic Payment) which they have been working on since 2014.
President Xi Jinping is backing the development of China’s digital Yuan. In October 2019, Xi told party members they needed to “embrace digital finance” and blockchain in order to get an “edge over other major countries.” Beijing clearly sees the digital Yuan as an opportunity.
Once launched, consumers will be able to download a ‘wallet like’ application authorised by the People’s Bank of China (PBOC). With this wallet, consumers can easily link to a bank account and bank card and begin paying bills, doing groceries and shopping online by simply using their smartphones. There are already thousands of merchants all across China who are ready to support consumers using digital currencies anyway.
Another example of how this will work is, the money from the linked bank account will be converted into digital cash on a one-to-one basis. Consumers can also choose not to link a bank account if they so desire. So long as they have digital Yuan in their wallets, they can transact.
Whats more, with this new DCEP system, Chinese consumers will be able to transact even without a live internet connection. Analysts are saying, most likely, due to this functionality and flexibility, consumers will see it as a huge time saver and convenient way to pay and transact.
On the note of America which clearly is undecided about cryptocurrencies and the slow adoption among US consumers has surely paved the way for China to position itself as a potential world economic leader – with the likes of being one of the first super-powers to utilize a digital currency as a legitimate form of financial instrument.
US President Donald Trump tweeted that he “is not a fan” of digital currencies. He made these comments based on Facebook’s Libra token fiasco back in July 2019.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
In fact, Mark Zuckerberg said China will overtake US. He gave a bombastic speech during the congressional hearing in his attempt to defend Libra (Facebook’s official digital token), which seems
to be nothing more than another controlled fiat currency. Mark warned US lawmakers that the US lacks innovation.
“China is moving quickly to launch a similar idea in the coming months,” he said, “We can’t sit here and assume that because America is today the leader that it will always get to be the leader. America needs to innovate”.
Mark Zuckerberg may have lost his footing to convince US lawmakers and Facebook funders on Libra, but what he said in his speech in Congress about China surpassing US, makes a lot of sense.
China, seeing the dominance of the US dollar has slowly begun to undermine it.
This was evident when eight-member countries of the Shanghai Cooperation Organization (SCO), including China, India, Russia, Pakistan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan met on 22 May 2019 and decided they would trade in local/national currencies instead of using the US dollar.
China has also indicated that the digital Yuan could be rolled out globally to some of the 70 countries which form the controversial Belt and Road initiative.
Do you think China will overthrow the US in terms of using the digital Yuan as legal tender? Share your thoughts below.
Watch this video to learn why China is so hell-bound to release their very own digital currency.