Asia & Australia

China shoots for blockchain supremacy

Following President Xi Jinping call for Chinese leadership in the technology, investors bet heavily as officials promote a digital renminbi, bash Facebook’s Libra

Chinese officials and investors have been making a full court press on blockchain and cryptocurrency development ever since President Xi Jinping’s comments on October 25 that China must “take the leading position in the emerging field of blockchain.”

According to the official Xinhua News Agency, Xi’s speech emphasized the importance blockchain technology can play in technological innovation. He also called for more investment, the accelerated development of blockchain technology, and more industrial innovation. However, Xi also said more blockchain regulation was coming along with the high priority. He mentioned the need for more research into security risks, as well as closer official attention paid to developments in the field.

Private investors heeded Xi’s words, piling into blockchain stocks, Bloomberg reported on October 27. Trading was halted in shares of more than 60 technology companies after they reached the 10% daily maximum rise in prices allowed by the Shanghai and Shenzhen stock exchanges. And, the Shenzhen Information Technology Index closed up 5.3%. 

Speaking at a Shanghai financial conference on Monday, October 28, prominent Chinese political figure Huang Qifan predicted that the People’s Bank of China (PBoC) will be “the first central bank to introduce digital currency in the world.”

Huang, who is vice-chairman at the China Centre for International Economic Exchanges think tank, added that the PBoC has been studying digital currencies for five or six years, according to news outlet Sina Finance

This directly contradicts Facebook CEO Mark Zuckerberg’s claim the previous week that China rushed out its digital Renminbi project in response to the social media giant-backed Libra stablecoin project. Zuckerberg made that claim during his October 23 testimony to the House Financial Services Committee. 

He also warned that if America doesn’t embrace innovation like the Libra blockchain-based digital currency, “our [world] financial leadership is not guaranteed financial leadership is not guaranteed.”

Huang, for his part, predicted that both Bitcoin and Libra would fail as digital currencies. He added, according to the South China Morning Post, that companies “trying to challenge sovereign currencies by issuing bitcoin and Libra [are] delusional.”

Allowing private companies to issue private currencies would cause “chaos,” the former Chongqing mayor said. 

Speaking at the same conference, Sun Tianqi, a senior Chinese foreign exchange regulator, also warned that Libra is a threat, reported Reuters

Pointing to illegal capital outflows and disruption of the management of foreign exchange, Sun said digital currencies like Libra should be banned if they threaten to replace the yuan in domestic transactions. 

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.