It’s the Olympics again It’s coming so soon! This is not your imagination. The 2021 games in Japan ended in 2021 after COVID delayed their conclusion. Speaking of COVID: The 2022 games will be held in China. After the two-years of bruising, the Chinese Communist Party hopes to improve their image. And that’s not just through impressive displays during the celebrations.
CCP wants the world to be amazed by its digital panopticons. Its crown jewel is the “central bank digital currencies” or CBDC. China’s government-controlled digital yuan, also called e-CNY, has been in the making for several years and will be “premiering globally” during the Olympics. CCP hopes that foreign journalists will be impressed by the speed and efficiency of such a centralized payment system. Unfortunately, it is expected that most of the Western media will eat it up.
This began well before the opening ceremonies. Here’s a glowing glimpse of it. FortuneThe digital yuan is described as “broadening financial inclusion and promoting equitable growth”. Uncritically, the author repeats People’s Bank of China’s arguments (PBOC), that the government is a better steward of users data than private payment apps WeChat Pay or Alipay. Without missing a beat, he writes that the PBOC would collect real-time data about money’s creation, circulation, and bookkeeping to improve “setting monetary policy.” It is clear that the digital Yuan should be “become a template” for all other countries.
Before the global spread of digital currency, China should make it a success model. China’s CBDC doesn’t really have the popularity it deserves, despite all the hype and media coverage. Since 2020, the government has begun testing pilot programs in select cities such as Shenzhen (a technology hub) or Chengdu. China expanded the pilots in a handful of other mysterious cities—the Atlantic Council could only identify 13 of the 28 total—throughout the past two years.
The Chinese are not interested in the digital currency for any reason. Official PBOC data estimates that $13.68 Billion in transactions took place since e-CNY’s launch two years ago. This is chicken feed in China. Alipay receives an average of $1.5 trillion each month in payments.
Chinese consumers love digital payments. They have decided to forgo cash and go digital. WeChat Pay and Alipay account for around 90% of Chinese transactions. It’s just easier—scan a code, push a button, end of transaction. Add to that the importance of WeChat for Chinese daily life, and you can see why digital payment has been so deeply embedded in China.
It must have been easy for the CCP to persuade Chinese citizens to choose their patriotic option. It’s a shame that citizens ignored it. You can say what you like about the party connections between the central all-inclusive data repositories Alipay and WeChat Pay. But these companies don’t actually represent the government.
China is actually undergoing its “war on large tech” since a while. Many in the West see Chinese companies as extensions of China’s state. However, the CCP has taken steps to crack down on technology giants Tencent and Alibaba who own WeChat, Alipay, and Tencent. The PBOC’s criticisms of the data practices used by payment giants have shown that the CCP views the digital yuan as a means to wrest power from the private sector.
We now come to the Olympics. Maybe some world googly eyes could inspire some enthusiasm for the government’s new digital currency.
Staff and athletes in the Olympic Village have only three choices for making payments. They can choose to pay cash, Visa or digital yuan. Visitor can then convert the local currency to e-CNY using a kiosk. This digital yuan is then loaded on a debit card. You can then use your card as any other. The PBOC wanted to sweeten things a little so they made wearables such as smart watches and ski gloves that can be loaded up with currency.
China is being a little too smug with its petard. China’s plans to splash out on big digital currency are being blocked by the COVID-19 isolation rules. The number of spectators who are allowed to attend games limits their exposure to new Chinese spyware innovations.
It’s not as if the American government doesn’t know what the intent is. Officials advised athletes to avoid using the digital currency yuan for surveillance purposes. Team USA has been urged by U.S. Olympic and Paralympic Committees to get rid of their phones and use a lighter instead. This is not bad advice. (The title “bad advice” goes to Rep. Nancy Pelosi’s confusion-inducing exhortation to athletes condemning Chinese human rights violations while keeping the CCP in check.
Many in the West believe that China cannot have these types of expansions. CBDCs don’t seem to be a Chinese innovation. Many governments across the West have begun to develop their digital currency, or are actively looking into it. Last week, Boston Fed released an exploratory document on its “Project Hamilton” project to design a resilient and high-performance transaction processor for the CBDC. China’s CBDC began with an exploratory document.
Bitcoin is already a secure and fast global payment method that you can trust. You can also make it private using Monero. The government is not required to intervene. Unless you support the government—then you want them to have all the power they want.
Remember this when you observe any Olympics journalists obsessing about China’s digital Yuan. It’s not the efficiency that impresses them—plenty of cryptocurrencies do that. The state controls it.