The Geopolitics of the Digital Yuan

Now more than ever, technology’s influence has sewn itself into every facet of our societal fabric. Politics, socialization, dispersal of information, and finance; these are just a few of the many concepts that have been transformed due to the evolution of technology. However, not all societal fabrics are the same, and geographical and geopolitical differences among countries have lead to a spectrum of technological influence. It is not possible to provide a blanket assessment of technology’s global influence due to the extent to which access to technology varies among countries. It is, however, possible to observe and record the extent to which technology is utilized in any specific country, whether it be by the government or the public. China is a country in which access to technology is often a topic of debate due to the extent to which it has shaped politics and culture. This influence will inevitably increase as technology becomes more and more incorporated into everyday life, and it looks as though this is already happening with China’s plans to release a “digital yuan.” 

Central Bank Digital Currency

In a statement released on January 5th by the People’s Bank of China, the digital wan project was described as “progressing  smoothly.” In their Monetary Policy 2020 report, they described that,

The bank will continue to build on the research into new innovations such as distributed ledger technology, crypto assets, and Central Bank Digital Currency, and play an active role as overseer to enhance security of the settlement system.”

In late 2019, under the supervision of China’s central bank, four major banks and economic participants began testing digital currency payments. It is expected that they will begin rolling out digital payments for the public sometime later this year, and there will undoubtedly be economic and social implications. Given China’s reputation, it is the consolidation of government power will be prioritized over the economic freedom of its citizens.

A History of Censorship

Amnesty International reports that China has “the largest recorded number of imprisoned journalists and cyber-dissidents in the world,” and Reporters Without Borders stated on multiple occasions that “China is the world’s biggest prison for netizens.” The most obvious and prominent form of censorship in China is political censorship, which is woven into nearly all layers of China’s internet infrastructure. Due to the extensive censorship associated with this infrastructure, it has come to be known as the “Great Firewall of China,” and it serves to halt the flow of information from the global internet to the Chinese internet. Not only do officials block access to certain sites, but they also actively monitor the internet use of individuals. It seems like an intuitive next step to begin monitoring the financial transactions of Chinese citizens by providing a currency to which they control the ledger. It may seem like a daunting task to monitor the internet and spending activity of billions, but it is reported that China has an internet police force of over 2 million officers. Beyond merely being possible, restricting access to the internet has distinct advantages for the party in power. Through these restrictions, the Communist Party of China is able to suppress rival movements that may be a potential threat to the stability of the Chinese government. Imagine the implications of the ability for the government to monitor and control the flow of money; this would be a massive extension of power and would likely result in the further consolidation of wealth, ironically counter-intuitive to Karl Marx’s idea of Communism. Although these restrictions seemingly have a stranglehold on a large portion of the internet-using population in China, there are still ways to evade these restrictions.

Evading Restrictions

Some Chinese citizens believe they have a right to privacy and a right to fully experience the innovations of their fellow humans, and therefore, will attempt to circumvent the “Great Firewall of China.” According to a 2000 Chinese Academy of Social Sciences (CASS) survey of Internet use in five Chinese cities, 10 percent of users surveyed admitted to regularly using, and 25 percent to occasionally using proxy servers to circumvent censorship. A 2005 CASS Internet user survey, asking the same question, received the following response: “never”: 71.2 percent; “seldom”: 19.7 percent; “sometimes”: 5.9 percent; “often”: 2.5 percent; “frequently”: 0.6 percent. We have seen these methods applied recently as the government has increasingly cracked-down on cryptocurrency related websites, including exchanges and block explorers. As the number of new Internet users increases year over year, it becomes increasingly difficult to accurately estimate the number of users that utilize VPNs or proxy servers. Also, many do not want to admit to circumventing the restrictions when questioned during polls, as they are breaking the law by doing so. Unfortunately, the government has managed to begin conflating those who circumvent the firewall in order to maintain privacy or seek unbiased information with legitimate cyber criminals; a distinction between these two groups could be made, but to the Communist Party of China, any circumvention of their laws is a challenge to their power and a danger to the stability of the Chinese government.     

Sources:

“China employs two million microblog monitors state media say”. BBC News. 4 October 2013.

Chinese Academy of Social Sciences, “Surveying Internet Usage and Impact in Five Chinese Cities,” November 2005, published on the Markle Foundation website, http://www.markle.org/downloadable_assets/china_final_11_2005.pdf

Guo Liang and Bu Wei, Survey report of Internet use and its influence: Beijing, Shanghai, Guangzhou, Chengdu and Changsha 2000 (Beijing: Chinese Academy of Social Sciences, 2001).

“How Censorship Works in China: A Brief Overview”. Human Rights Watch. 30 August 2006.

“Inside China”, Miles Yu, Washington Times, 8 February 2012.

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