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Finance & Economy

The US-China digital currency competition


China’s digital currency project has come to real life in Oct 2020 (image from Kitco.com)

RMB200 digital cash was given freely to each of 50,000 consumers selected by a lottery in Shenzhen, mainland China, in early Oct as an experimental trial for use (Reuters Oct 19).

Each consumer is given a ‘digital wallet’ with the digital cash from the Central Bank by downloading an App onto his/her smart phone.

Payment can be easily completed by some sort of touching and scanning between the electronic devices equipped with the App.

The wallet can collect, store, pay or transfer digital money directly without a need for any bank account. This wallet-to-wallet transaction mode can also operate without internet connection.

When the U.S. was aware of China’s adventure into digital currency, the Libra Association was founded to enlist more than 20 organizations creating the world’s first blockchain-derived global payment system.

This American-led initiative is supposed to be retaining the US dominance over the global cryptocurrency marketplace (FairObserver.com Oct 5).

However, Beijing bypassed this western standard with a completely new technology named as DC/EP. What matters is that, firstly, DC/EP is much much more user-friendly; and secondly, it is now already in real-life trial while the Libra version is still in the talk room. Looking forward, the digital currency can be used for international trade and investments.

In 2019, the Washington-based Foundation for Defense of Democracies (founded after 9/11 attack) issued a report on crypto currency and made as many as 8 recommendations to confront China’s move (FDD July 2019). How the US-China rivalry or competition may evolve is yet to be seen, but surely the USD dominance is at risk.

The opinions expressed are those of the author, and not necessarily those of China News.

About keith K C Hui

Keith K C Hui is a Chinese University of Hong Kong graduate major in Government and Public Administration and the author of "Helmsman Ruler: China's Pragmatic Version of Plato's Ideal Political Succession System In The Republic" (2013).

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