Believe it or not, the US is now fighting a technology cold war. Also an economic and strategic assault on China. While we will eventually strive to return to the hope and potential of a large China / U.S. Partnership, now is not the time for that. It is a huge problem for our world and we will do our best to stop losing our economic leadership.
The Technology Cold War is on
By now, we all know the 5 G and AI competition, which is part of China’s $1.4 trillion investment in technology. The similarly important question has gained less attention: who will govern our future global financial structures.
The strength and wealth that Americans possess because the dollar is the reserve currency of the world can not be overestimated. Although the US accounts for 21 per cent of global GDP, the currency represents more than 88 per cent of world trade. Much of that advantage derives from America’s stewardship of the world’s financial systems, granting the US considerable influence over foreign affairs and promoting a new trade order founded on American ideals of individual equality and open access. The planet has benefited greatly from American stewardship, like China.
Yet there is a time of profound shift over here. Most of the world’s financial system remains built on outdated 1970s technologies and faces drastic shifts from digital wallets, blockchain development, cryptocurrency and interoperability protocols. To China, there is an opening once in a century to take away American stewardship over the global financial system, and its overarching goal over substituting the dollar with a digital yuan.
China vs. US
Although such innovations are gaining mainstream popularity far from a household name. At a high level, cryptocurrencies are digital assets or currencies that are allowed through centralized ledgers called blockchains, where there is no central network controller. Other than conventional fiat money provided and supported through governments. Blockchains are basically distributed repositories. Which can be accessible by anyone and which allow you to transfer assets without a central counterpart.
China plays the long game with a series of diplomatic moves. That will leave the U.S. anxious to hold our lead. China has already made near universal domestic use of digital payments by financial tech giants like Alipay and WeChat. And it’s on the cusp of launching a state-controlled digital currency — the digital Yuan.
The Chinese government also subsidizes the large quantities of resources needed to supply the country’s crypto-currency “miners”. Mining is one means of checking blockchain transactions where individuals or companies. In exchange solve complicated mathematical problems for crypto. At least 65 percent of cryptocurrency mining is concentrating in China. Meaning that the Chinese government has the bulk required to regulate certain protocols. And can easily ban or reverse transactions.