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China The Almighty Buck

China Creates Its Own Digital Currency, a First for Major Economy (wsj.com) 136

Posted by msmash from the closer-look dept.
A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power. From a report: It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the U.S. and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code. Cryptocurrencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren't legal tender like cash issued by governments.

China's version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China's government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin's major draws: anonymity for the user. Beijing is also positioning the digital yuan for international use and designing it to be untethered to the global financial system, where the U.S. dollar has been king since World War II. China is embracing digitization in many forms, including money, in a bid to gain more centralized control while getting a head start on technologies of the future that it regards as up for grabs. "In order to protect our currency sovereignty and legal currency status, we have to plan ahead," said Mu Changchun, who is shepherding the project at the People's Bank of China. Digitized money could reorder the fundamentals of finance the way Amazon.com disrupted retailing and Uber rattled taxi systems. That an authoritarian state and U.S. rival has taken the lead to introduce a national digital currency is propelling what was once a wonky topic for cryptocurrency theorists into a point of anxiety in Washington. Asked in recent weeks how digitized national currencies such as China's might affect the dollar, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have said the issue is being studied in earnest, including whether a digital dollar makes sense someday.
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China Creates Its Own Digital Currency, a First for Major Economy More

China Creates Its Own Digital Currency, a First for Major Economy

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  • Of course it is (Score:5, Insightful)

    by RitchCraft ( 6454710 ) on Tuesday April 06, 2021 @11:08AM (#61242928)
    "It is expected to give China's government vast new tools to monitor both its economy and its people."

    • Re:Of course it is (Score:5, Insightful)

      by Rick Schumann ( 4662797 ) on Tuesday April 06, 2021 @11:50AM (#61243132) Journal
      Exactly. The main reason they want to do this is to tighten the noose around their citizens' necks, track every single thing they do, even if it's buying a piece of candy for their kid.
      Personally I think the Chinese government would like nothing better than to cut their citizens off from the rest of the world entirely like North Korea does. No one goes in, no one goes out, you never hear anything about the rest of the world, and you're even raised to believe there's nothing out there, nowhere to go.
      Here in the U.S. we may have our problems but we're not evil like that.
      • I'm not sure of this. China definitely has plans for expansion - their activities in the South China Sea demonstrate this. What is uncertain is how far they wish to go.

        • Re:Of course it is (Score:4, Insightful)

          by Lord Apathy ( 584315 ) on Tuesday April 06, 2021 @12:49PM (#61243446)

          Not to mention China's activity in Africa. The Chinese are buying up vast amounts of land in Africa.

          • ...likeky because they plan to outsource there now that the standard of living in China is going up, and they will find cheaper labor there.

            Just like the US did when it began outsourcing to china.

            • Re: (Score:3, Informative)

              by LynnwoodRooster ( 966895 )

              It's not about outsourcing - it's about resources. China really only has three deep pools of resources: land, coal, and people. They import massive amounts of just about everything else, including food, oil, and materials for production of nearly everything. Access to an entire continent where the growing of food and fibers, and awash in minerals and petroleum, is exactly why China wants Africa for its own.

              If it was just cheap labor, Vietnam, Laos, Cambodia, Myanmar, and more would be the expansion. N

      • You apparently haven't been following China at all. They want to control the entire South China Sea, despite the fact that there are several countries that border the lower half of it. In fact, there is MORE coastline of non-China countries than Chinese coastline. They have also been trying to bribe their way to influence in poorer countries. Oh, and then there is Taiwan. You even HINT that it isn't part of China and they go ballistic. No, China wants the entire world to be either part of China or und
        • Oh, I know all of that, I've mentioned it all myself before. But it wasn't necessary for this particular topic.
          I'm just wondering how much more surveillance the Chinese people will put up with before they revolt. Humans do not like being watched constantly.

        • No, China wants the entire world to be either part of China

          No, they want the South China Sea and Taiwan, the disputed border with India, and the disputed islands with Japan. That is not the entire world. China is not pre-WWII Japan.

          or under their influence.

          So does the US. The only reason they support Japan, the Philipines and Taiwan is to have influence to keep China under control. And they complain about Africa because they're not in control.

      • .Personally I think the Chinese government would like nothing better than to cut their citizens off from the rest of the world entirely like North Korea does. No one goes in, no one goes out, you never hear anything about the rest of the world, and you're even raised to believe there's nothing out there, nowhere to go.

        Having actually been to China and had a couple of what I will call "born and raised in China" girlfriends and various friends who were born and raised there, that's not really true. You might be surprised, but as long as the CCP's hold on power isn't threatened, the government actually doesn't care that much what people know or think. If a Chinese person thinks the Chinese government is evil but is 100% compliant to that government anyway, they are totally OK with that. They know that letting people

      • Much simpler than that. Chinese don't pay taxes. Chines government wants them to.

        Also makes it much harder to bribe the 'wrong people' if the money is traceable.

      • Personally I think the Chinese government would like nothing better than to cut their citizens off from the rest of the world entirely like North Korea does.

        That is just really stupid and completely does not understand how the Chinese government think. China has a history of rebellions overthrowing governments. A North Korea situation will just piss people off and make it much more likely for small scale protests to organize into large scale rebellion.

        The Chinese government was probably rubbing its hands with glee to be able to show how democracy in the US failed.

  • so what? (Score:4, Informative)

    by buswolley ( 591500 ) on Tuesday April 06, 2021 @11:09AM (#61242930) Journal

    Crypto electronic is not automatically better than traditional, and I guarantee that they are primarily doing it for surveillance.

    • I believe you're 100% correct. Tightening the noose.

    • Re: (Score:2)

      by Thaelon ( 250687 )

      It's better if it's not controlled by an authority. Like USD (private bank control) or this Chinese government controlled crypto.

    • Re: (Score:3)

      by gtall ( 79522 )

      You cannot guarantee squat. Another possible reason is that they want to replace the dollar with their own reserve currency. They wanted to do that with their real money but no one trusted them.

    • If it is an official currency and intended to replace the dollar, then it could be traded and used outside of China also, which means that transactions in other countries would also be surveilled. This could be about as powerful as the USA's cellular and internet surveillance. The USA spies on all foreign network packets that pass through the USA and many in outside countries as well. China will spy on ALL transactions made with its cryptocurrency.

  • also can have lower fees and faster then bitcoin.

    Now how long before bitcoin is banned?

  • Control is too useful to renounce. (Score:5, Insightful)

    by couchslug ( 175151 ) on Tuesday April 06, 2021 @11:15AM (#61242958)

    Governments issue currency to manage their economies and the more control they have over it the more power they have.

    Control every transaction and you control your people.

    • Brokered trades can still bypass currency. e.g. You and I agree to trade a cup of my sugar for two of your eggs.

      Unfortunately, the whole reason money was invented was to avoid having to string together long chains of brokered trades. I only have sugar to trade and want eggs. The person with eggs wants butter. The only person I can find with butter wants a chicken. The only person I can find with a chicken wants carrots. The only person I can find with carrots wants corn. And finally the person who has c

      • Brokered trades can still bypass currency. e.g. You and I agree to trade a cup of my sugar for two of your eggs.
        Unfortunately, the whole reason money was invented was to avoid having to string together long chains of brokered trades...

        The bigger issue in China is that you don't want to do a brokered trade much bigger than two eggs or a cup of sugar...if someone suddenly stops buying eggs, that's going to cause a knock on the door, and the only question worth asking is whether the police officers will really forget all about this if you give them $100 and tell them who your source is...and if you're the source, you're in even bigger trouble.

        That's the benefit here.

    • Re: (Score:2)

      by Thaelon ( 250687 )

      Still preferable to private control of currency such as we have now where all other concerns are secondary to whatever the banks that control our currency want. At least there is some accountability.

      We need to kill the fed again.

    • because it's not Bitcoin or other private currencies. They're incredibly prone to market manipulation by even moderate sized players. You'd just be trading government (that you can theoretically get a say in ) for a billionaire's whim (that you have no say in).
  • How long untill BTC and other coins are made illegal in china in order to prevent competition with the state coin?

    • Re: (Score:1)

      by Anonymous Coward
      China is the primary driver behind Bitcoin's ridiculous prices. For internal use, I expect that they'll outlaw Bitcoin as soon as the State Coin is ready (if not earlier). Externally? China will keep perpetuate and manipulate Bitcoin right until they have absorbed every last cent from the fools that buy in. Since there has never been a shortage of fools looking for get-rich-quick schemes, Bitcoin will probably live forever.
    • They have banned it multiple times in the past....
  • ...for the people.
  • Anonymous or bust... If it's not anonymous, I'll stick to cash thanks... I don't need the government tracking every transaction I make - they know to much already.
    • If they cared at all about that the government would just require businesses to scan their cash and use the serial numbers to track cash flow.

    • Anonymous or bust... If it's not anonymous, I'll stick to cash thanks... I don't need the government tracking every transaction I make - they know to much already.

      I'd love to know why you feel even your cash transactions, are still anonymous in the 21st Century.

      To sum it up in two words? Mass Surveillance.

  • A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

    The power is that the majority are using it in some way be it directly, or part of trade (yes, even drugs). Cryptocurrency doesn't have that power.

  • It would not surprise me if China's next step would be that they abolish/prohibit Bitcoin for Chinese people.

  • The pillar of American power is our military (Score:5, Interesting)

    by rsilvergun ( 571051 ) on Tuesday April 06, 2021 @11:41AM (#61243090)
    specifically our Navy. We're imperialists. We just don't like to talk it up like the British empire did.

    That said, now would be a good time for some serious infrastructure spending so that we're not dependent on Chinese manufacturing. They're pretty clearly planning to "Belt & Road" us. They keep buying up our businesses and real estate. Maybe having so much of our country owned by authoritarian foreign governments is a bad idea. I kind of like that ownership to be with my citizens who I can sanction with laws instead of bombs.

    As for the debt we owe them, there's an easy solution: Pass the Medicare for All bills, use the savings [thehill.com] to pay off China.

    • No, you *can't* talk it up?

      You do realize war is the action of last resort of a country too desperate or just plain too stupid to do it the wise way.

      E.g. 14th century China is a funny counter-example:
      They just landed at the shore of some country along the southern coast od Asia... with a fleet 100 times larger than any other army they had ever even heard of ... brought a.load of amazing gifts ... and then all they had to say was: "This is our deal. Do you want to be part of our country?" :D
      Not a single drop

      • One of the things that Sun Tzu said in his "Art of War" is that if you have to resort to using military force to accomplish your goals you have failed as a leader.

        It is a remarkable book, still as applicable in the 21st century as it was when written over two thousand years ago at all scales of conflict, from personal all the way up to international. I would highly recommend getting a copy and reading it. With the occasional re-read every so often as well.

        It is also interesting to note that it is required

    • I'm not sure we're imperialists any more. Just because we fight in wars doesn't make us imperialists. We certainly were 200 years ago, what with all our border expansion, but very little we've done in the past century has involved taking land for permanent control. Yes, you can point to a few islands as counterexamples but for the most part our borders have been pretty stable. Personally I think we're post-imperial.

    • Re:The pillar of American power is our military (Score:5, Informative)

      by MobyDisk ( 75490 ) on Tuesday April 06, 2021 @03:32PM (#61244268) Homepage

      The Americas and Europe are post-imperialist. They have no significant border disputes and lay no claims to land on any other sovereign nation. Most USians see national borders as set in stone and have no interest in expanding their own. The most hyper-patriotic USians are for isolationism, rather than expansion. They would rather the US military pull out of other nations. Russia and China, on the other hand, are imperialistic. They lay claims on land and sea that the rest of the world does not acknowledge as theirs. They are actively trying to muscle control of those areas through low-level war tactics. China claims Taiwan, Hong Kong, Tibet, the South China Sea, ... (looking on Google)... Arunachal Pradesh, and probably some others. Russia is trying to take Ukraine and succeeded in doing so only a few years ago.

      • Re: (Score:2)

        by cfalcon ( 779563 )

        The fact that you refer to Americans (the self-identified term) with the slur "USians", a shitpile term created by anti-American activists in protest about the completely irrelevant fact that the term "America" can also be used to refer to two continents, and that no one has called you out on this in two days, is reasonable proof of demoralization of the American people. This kind of demoralization comes at a cost, especially the next time imperialists like the Chinese or Russians decide to expand and the

        • Re: (Score:2)

          by MobyDisk ( 75490 )

          the completely irrelevant fact that the term "America" can also be used to refer to two continents

          That distinction is quite relevant here since I was making a statement about US culture, not culture in Canada, Mexico, or Brazil. I didn't realize that term was offensive to anyone. "US Citizens" felt a bit formal. Also, you need to chill: Don't call someone anti-American when they are defending America.

  • You essentially have a zero interest rate, zero fee current account with the central bank.

    With today's problems with banks that's going to be a very interesting proposition for many people ... too many people. It would be disastrous for the banking system, especially in some economically weaker European countries.

  • It allows perfect totalitarian tracking of all transactions.

    Official transactions, that is, of course. ;)

    I wonder what the unofficial transactions will use...

    (The easiest is the wishlist system. It requires no currency at all, nor the limitations of bartering. You make a list of things/services you want to buy. And whoever wants to pay you, just gives you those things as a gift... How they were acquired does not matter ... As long that itself is legal and/or as nobody comes looking after them, of course. An

  • The difference between the new Chinese cryptocurrency and Bitcoin is that nobody is forcing you to hold Bitcoin. When the most populous nation on Earth starts requiring its people to use its own cryptocurrency then you will have by far the largest market in terms of currency holders.

    You will also see companies doing business in China accepting their cryptocurrency just to stay in the good graces of the Chinese government. In the end it is likely to end badly for all but the elite in China.

  • so that readers still have no idea what exactly "minting cash digitally" and "digital currency" means. (the article itself is conveniently paywalled.)

    it seems it is more than just a payment system (which, according to the summary, is "just a way to move money electronically").
    it also seems it is not a cryptocurrency.

    is it a setup where citizens (and possibly non-citizens) can open an account directly with the Chinese Central Bank and use payment systems to pay each other and businesses directly? then that's

  • I mean, if all 'existing', 'issued' currency, were to be presented for redemption into paper bills, there aren't enough to satisfy that/those request(s), right?

    So much of US dollars are, de facto, virtual.

  • It was bound to happen. And places like China are usually the first to try something like this.

  • Digital USD rolls out... then...

    Suddenly, merchants and services that are deemed unpopular or fall out of favor of the narrative/virtue-signaling will be banned from dealing in Digital USD.

    If the people that gateway your access to your digital USD don't like the things you post on the Internet or the people/merchants you deal with, they will suspend or ban your access to your Digital USD.

    Digital USD wallet thefts/hacking. 'Nuff said.

    But no worried, because eventually Digital USD will be seen as
  • We are and will continue to lag as long as we deprecate male creative aggression in our culture (USA). Males are far more aggressively creative and to replace them with the mere ability to do things of females is a recipe for failure. Every major technology that we have was invented and pushed forward by males. The gender-leveling that hyper-liberal democracy demands is detrimental to our ability to compete and win in all areas of human endeavor.

  • High price for Chinese banking (Score:3)

    by laughingskeptic ( 1004414 ) on Tuesday April 06, 2021 @02:04PM (#61243842)
    Chinese banks are going to pay a high price for their government's expansionist objectives. They are being cut out of the transaction loop by their own government.
  • "It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the U.S. and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code." A distinction without an distinction at all. Most currency transactions today do not involve moving any physical assets, just computer code. Cryptos main features as much as anything is no centralized control and anonymity. Without tho
    • As long as I can buy it and sell it, it's just as good as any other currency for me, and probably better than credit card transactions.
  • The advent of paper money was a big deal and 99% of people have all the digital currency they need in the forms of credit and debt cards. Digital currency just takes cash and makes is WAY less disaster reduendant. You're putting all your eggs into one basket and getting no real benefit. The banks and the government get almost all the benefit. The problem is that fiscal corruption that you can stop with digital currency isn't a big enough problem from the types of people it will be used to target vs the bi
  • As depicted in Mr. Robot. The only difference is it happened in China first instead of US.

  • Bitcoin I think is a Chinese invention. It's also a time bomb. One day (soon) it'll be worthless. Think about the kids game where you're going around, five kids, four chairs. Now four kids, 3 chairs. We lose satoshi's every day. Mining as well. Eventually it'll die. Those holding bitcoin will be holding the very expensive worthless bag. Smart people will get out about now.

    Chinese were expected to come up with their own digital currency. How long before it's hacked. It'll happen and they'll lose trillions.

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