Tuesday, May 26, 2020

"China is testing a national digital currency — one piece in Xi’s bid for global influence"

The writer, Fred Kempe is the President and Chief Executive Officer of the Atlantic Council, about as wired-in, Davos style as you can get.
I have to get this out of my head. When we saw this on Monday:
I couldn't help wondering how Madame Peng would address concerns about here husband's influence on the WHO as she was out Goodwill Ambassadoring. I mean looking at her in the uniform: she appears, in a word, formidable.
But then I saw the picture below and it struck me: she IS formidable and I wouldn't put it past her to tell her Davos-style audiences "Oh don't mind Pooh Bear, he just talks tough."

https://mottomedia.files.wordpress.com/2017/04/xi-jinping-wife-pe_2517570b.jpg?w=620

Okay, enough with the family stuff, here's CNBC, May 23:
  • Chinese President Xi Jinping’s  move to impose new national security laws on Hong Kong  is just one of his many calculated wagers designed to leverage Covid-19′s disruptions for greater domestic control and global gain.
  • Most intriguing and least noticed, “China became the first major economy to conduct a real-world test of a national digital currency,” wrote Aditi Kumar and Eric Rosenbach this week in Foreign Affairs.
  • The impact of that move, over time, could have greater global impact than anything Beijing does in Hong Kong or even to Taiwan.
This is the way new eras unfold – gradually at first and then suddenly.

Chinese President Xi Jinping’s apparent rolling of the dice on Hong Kong ahead of this week’s National People’s Congress is just one of his many calculated wagers designed to leverage COVID-19′s disruptions for greater domestic control, regional influence and global gain.

China’s move to impose new national security laws on Hong Kong, the most serious threat yet to the city’s democratic self-governance and territorial autonomy, prompted a 5.6% decline in the Hang Sang Index (the worst one-day performance in five years).

Beyond that, the decision could ignite new Hong Kong pro-democracy protests, it should raise new concerns about Taiwan’s sovereignty, it will feed the growing deterioration of U.S.-Chinese relations, and it may contribute to anxiety among world democracies about what values a Chinese-led world order might reflect.

Seen in isolation, some analysts see the surprise Hong Kong move as reckless.
Put the decision beside other recent actions, however, and the pieces fit neatly together into President Xi’s long-standing strategic purpose: strengthening the party’s domestic hold, solidifying China’s regional power and expanding its international influence – all in a sharpening competition with the United States.

Those recent actions include, but aren’t limited to, new technology investments of an estimated 10 trillion yuan ($1.4 trillion) over six years to 2025, reports that China’s defense budget will grow by up to 9%, and its increased efforts to influence multilateral institutions as the Trump administration retreats, most recently through Beijing’s $2 billion contribution to the World Health Organization.
Most intriguing and least noticed, “China became the first major economy to conduct a real-world test of a national digital currency,” wrote Aditi Kumar and Eric Rosenbach this week in Foreign Affairs. They describe a pilot project in four large Chinese cities which the authors see as putting China years ahead of the United States in developing this “central component of a digital world economy.”

The impact of that move, over time, could have greater global impact than anything Beijing does in Hong Kong or even to Taiwan.

“U.S. policymakers are unprepared for the consequences,” Kumar and Rosenbach write. In general, digital currencies weaken the power of U.S. sanctions and the ability of U.S. officials to track illicit financial flows. More specifically, a digital yuan combined with China’s advanced electronic payment systems may provide a more effective platform for future influence than a fleet of aircraft carriers.

I argued in this space three weeks ago that President Xi and his Chinese Communist Party, by emerging as the first major world economy to end virus lockdowns and restore growth, were seizing a window of opportunity – one that could close as rapidly as it had opened.

“Great historical progress always happens after major disasters,” President Xi said recently at Xi’an Jiaotong University, telling professors and students of Chinese sacrifices of the past and the possibilities of the moment. “Our nation was steeled and grew through hardship and suffering.”...
....MUCH MORE
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