A store in Suzhou, Jiangsu Province, where you can pay with digital yuan. (Photo credit: Wikipedia)
The Chinese Communist Party is actively developing and testing the digital yuan, and has recently launched a new move to increase its promotion. Relevant officials bluntly stated that people will see the convenience of digital payment and no longer have to pay through Alipay or WeChat.
According to Reuters, six large state-owned banks in Shanghai have been officially authorized to promote digital renminbi in the face of the upcoming May 5 shopping holiday. The banks are convincing sellers and retailers to download digital wallets so they can transact directly through the digital yuan.
An unnamed bank official was quoted as saying that people will see the convenience of digital payments and no longer have to pay through Alipay or WeChat.
Another bank official in charge of promoting the digital yuan said that WeChat Pay and Alipay have a lot of data and that promoting the digital yuan to replace the former two would help boost China’s (CCP) anti-monopoly activities and help the government control big data.
On Feb. 7 this year, the CCP’s General Administration of Market Supervision issued the Anti-Monopoly Committee of the State Council’s Anti-Monopoly Guidelines on the Platform Economy, launching a round of anti-monopoly campaigns against Internet technology companies.
On the 10th of this month, Jack Ma’s Alibaba was hit with an astronomical fine of RMB 18.228 billion by the authorities, which is the largest amount of fine since the implementation of the anti-monopoly law by the CCP.
In addition to suppressing private technology giants, the CCP’s attempts to control big data through the promotion of digital renminbi have raised concerns about further surveillance of the public.
Yaya J. Fanusie, an associate senior fellow in the Energy, Economics and Security Program at the Center for a New American Security (CNAS), has told Voice of America that under the Alipay and WeChat Pay platforms, the People’s Bank of China does not have direct access to financial transaction information, and that by digitizing RMB cash transactions by design, the central bank will have the ability to monitor transactions in real time and keep close tabs on individuals’ s financial situation.
This will help the government control party members, censor party members, and even dissidents or other groups of people,” he said. This could potentially be used as a more direct means of pressure, because technically the CCP could actually cut off [access to digital renminbi] very directly if it wanted to do so.”
Emily King of the Center for a New American Security said that from a geopolitical perspective, if the digital renminbi is successful within China, the CCP could export the system to other countries, and its “Chinese” surveillance model could be attractive to some countries.
In addition, statements by CCP officials and academics reveal that the CCP is accelerating the development of the digital yuan for another important purpose, namely to challenge the status of the U.S. dollar.
Since the deterioration of Sino-U.S. relations, Fang Xinghai, vice chairman of the CCP’s Securities Regulatory Commission, Guo Shuqing, chairman of the CBRC, and Zhou Li, former vice minister of the Liaison Ministry, have all expressed the need to explore alternatives to the dollar-centric system of international settlement.
Such an alternative could be the digital yuan, according to Tsinghua University professor Ju Jiandong.
In response, the U.S. has taken action, with computer technology expert Pace telling the Voice of America that the U.S. is adopting an “anarchist” model in encouraging financial technology innovation, with “everyone doing it, competing to see what’s best.” .
Pace believes that by the middle of the 21st century, there will be many entrepreneurial initiatives and new things happening that will counter the Chinese Communist model.
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