China’s state-owned banks such as the Agricultural Bank of China and China Construction Bank are testing the operation of digital currencies. Scholars believe that the Chinese model of the digital currency actually enables the central government to exert full control over personal wealth, which means returning to the era of a planned economy.
Si Ling, a financial scholar from Shandong University told Radio Free Asia (RFA), “The purpose of China’s vigorous promotion of digital currency is to manage its fiscal revenue in a more organized manner. With the deterioration of Sino-US relations and China’s foreign trade situation, the government will focus on fiscal revenue. In the past, many people used cash transactions to evade tax collection.”
Si believes that, if the Chinese government fully implements digital currency, “transactions will be completely under government supervision, which is conducive to the growth of government revenue. If digital currency is implemented, it may be a public-private partnership in the 21st century. In other words, private wealth can become public owned overnight, if the government chooses to do so.”
Dong Yongqi, a businessman from Shanxi province, told RFA that once the Chinese people start to use digital currency, their personal interests and their privacy will be infringed upon. “For the common people, it will do more harm than good. Most people read the propaganda and don’t understand the invasion of personal privacy that occurs with digital currency. The digital currency is the preparation for returning to the planned economy.”
Dong discussed the fundamental difference between China’s digital currency and that of Western democracies. “The digital currency of a free country by nature uses the blockchain technology and is decentralized, but our country’s digital currency has been centralized. The central bank is in charge.”
Chinese economist Hu Xingdou told RFA that China’s so-called digital currency is not a digital currency in the real sense: “It should be called electronic currency. It is very different from digital currency in terms of privacy and traceability. In other words, digital currency protects personal privacy. Other people, even the government, control no information.”
Caijinglengyan, an overseas social media account, commented that China’s digital currency is to prepare for the planned economy! Its characteristic is the control over currency use and material distribution. One can consider digital currency such as food stamps, meat coupons, travel passes, transportation documents, and permits for big-ticket purchases in the digital age.
Source: Radio Free Asia, August 17, 2020