Posted 1 year ago | by Ben Armstrong
The 'One China' Policy May be Ending – is the Digital Yuan Going to Fail Internationally?
The relationship between the USA and China is falling apart. In fact – we may be at a turning point in history. While some of the moves that have evolved from trade liberalization with China have been a benefit to Western corporations – the power that China has amassed is ultimately at odds with the existing oligarchic-corporate world order.
From a practical perspective this terminal conflict of interest is coming to a head – and the results won't be pretty. The latest move by a US Congressman to end the 'One China' policy that has helped to keep the peace between the US and China is just a taste of things to come, as the biggest power struggle in at least a century plays out on the global stage.
The popular narrative surrounding China for the last few decades has almost universally painted China as the replacement for the USA as the global super state – but this isn't at all guaranteed to take place.
It is true that China has risen as a manufacturing powerhouse – but in a world where new technology can upend the existing social models (think 3D printing) – a large manufacturing infrastructure may not be enough to secure power for the nation – as it did for the England, in the late 18th century and 19th century – and the USA, in the 20th century.
The Question of Hard Money
The Digital Yuan (DY) was getting loads of press until the Summer of 2020. It may have been a bargaining chip in the US/China trade negotiations – but whatever it was – it is seemingly over now.
At first the CCP (via the People's Bank of China or PBoC) proposed that the DY be rolled out quickly, and trialed in some of the biggest cities in China. Now – it looks like it isn't being widely used – even by the banks which were tapped for the pilot programs.
For all of its advancements, China has yet to allow a real offshore trade in its currency to develop – although there is an international market for its currency. The system is complex, and it isn't commonly used by nations who don't do a substantial amount of trade with the Middle Kingdom.
China Exists in a Fiat World it Didn't Create
It is strange that so much focus is being put on China's digital currency – as its traditional fiat currency isn't widely used as a global clearing asset. While many of China's trade partners will accept the Yuan – its level of use is much lower than currencies like the USD and EUR (despite being a massive economic entity).
If China does decide to retaliate against the USA in the coming years over the growing anti-China sentiment – and the policy decisions that are being made – it may not have as much power as many commentators think.
US dollar usage has fallen substantially – but the value of the US dollar against other major currencies is fairly steady. The simple fact is that if modern fiat currency is going to be replaced – it won't be by a currency like the Yuan – digital or not.
Instead of another fiat currency – it is far more likely that people will want to have assets that can't be used for political ends – like crypto and gold. We have already seen a big move up in token prices – as well as gold – which is probably the next major trend in assets.
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