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  • China's new digital yuan

  • Threatens US power

  • Could it kill the US dollar?

  • Welcome to China Uncensored. I'm Chris  Chappell. China's new digital currency  

  • is a huge threat to the US.

  • But first remember to like this episode  and subscribe to China Uncensored.  

  • Our episodes also often get  demonetized. So if you can,  

  • please support the show on the  crowdfunding website Patreon.

  • And speaking of funding, China has  created its own digital currency.

  • It's known as the digital yuan, the digital RMB,  

  • or sometimes the e-Chinese yuan, to make  it as awkward as possible to talk about.

  • China's version of a digital  currency...is expected to give  

  • China's government vast new tools to  monitor both its economy and its people.”

  • But the digital yuan isn't just about  the Chinese Communist Party's ability  

  • to control its own economy. It's  also about the Chinese regime's  

  • increasing global power, and its  long-running battle with the US dollar.

  • For more on that, we go to Shelley Zhang.

  • Shelley?

  • Thanks, Chris.

  • China's digital yuan is the anti-Bitcoin.

  • Bitcoin is not controlled  by any central authority,  

  • and Bitcoin can offer almost  anonymous transactions.

  • But China's digital yuan is controlled  by the Chinese Communist Party,  

  • and the Party can see  everything you're doing with it.

  • It's kind of like Chinese leader Xi Jinping  is watching all of your Venmo transactions.  

  • I have no idea what this is Chris, but  you spent almost 300 dollars on it,  

  • so it's probably embarrassing  enough for blackmail.

  • Hey! How did you get that?”

  • Moving on.

  • Of course, China's central bank  claims that itwill limit how  

  • it tracks individuals,” with the digital  yuan, throughcontrollable anonymity.”

  • And if you believe that, I've got  an invisible bridge to sell you.

  • But it's not enough for the Chinese regime to  watch how its citizens use the digital yuan.  

  • They also want to be able  to control when they use it.

  • Beijing has tested expiration dates  to encourage users to spend it quickly,  

  • for times when the economy needs a jump start.”

  • Forget giving people stimulus checks and  hoping they spend it to help the economy,  

  • like the US government does. China can make people  spend their own money, or else they take it away.

  • Of course, there are some  caveats. If you're Uyghur,  

  • then the digital yuan expires twice as fast.

  • And if you share a Winnie the Pooh meme,  

  • the government just takes all  your digital yuan. Forever.

  • Ok, that's not true. Yet. But the digital yuan  would give the Chinese Communist Party the ability  

  • to do those things. They could use it to monitorcontrol, and punish dissent more easily than ever.

  • Chinese people have already been primed to use the  digital yuan from years of using mobile payment  

  • apps like WeChat Pay and Alipay. Those apps have  turned China into an almost cashless society.

  • We've talked before about how WeChat Pay  and Alipay are basically surveillance money.  

  • And how sucking up all of this user data has  made the tech companies who own these apps  

  • even more rich and powerful.

  • But now that the digital yuan is ready,  

  • the Chinese Communist Party is starting  to crack down on WeChat Pay and Alipay.

  • Why go through the hassle of having to get user  data from tech companies when the central bank  

  • can just collect it directly with the digital  yuan? They're just cutting out the middleman.

  • Of course, the central bank also  says that the digital yuan will  

  • coexist in harmony with Alipay and WeChat Pay.

  • But if you believe that's the  long-term plan, I'm telling you,  

  • that invisible bridge has some  stunning views. Really worth the money.

  • But the digital yuan isn't just about  domestic control. It's also about  

  • international control. I'll  tell you why after the break.

  • Welcome back.

  • The Chinese Communist Party  hates the fact that China,  

  • like the rest of the world, is dependent on  the US dollar as the global reserve currency.

  • Nearly 90% of foreign-exchange transactions  involve dollars and...more than 60% of all  

  • global central-bank reserves are  held in dollar-denominated assets.”

  • That gives the US a lot of power. For  example, the dollar's dominance is a big  

  • reason why US sanctions on countries  like Iran and China actually work.

  • Just ask Hong Kong Chief Executive Carrie Lam,  

  • who literally has piles of cash at homeand no bank account, due to US sanctions.

  • For more than a decade, the Chinese Communist  Party has tried to internationalize the yuan.  

  • They want to position the yuan as the next  global reserve currency, challenging the dollar.

  • So far, it's failing.

  • Here's why people use the dollar as a global  currency: the US is a huge economy that people  

  • do a lot of business with, it's really easy  to use US dollars for trade and investment,  

  • and dollar assets are a safestable place to park your money.

  • China is also a huge economy. But otherwise, the  dollar and the yuan are almost exact opposites.

  • The Chinese Communist Party has strict capital  controls on the yuan. That means they strictly  

  • control how much yuan can leave China. Which makes  it hard to use the yuan for trade or investment.

  • And it's also not a safe place to park your moneybecause Chinese authorities use the yuan exchange  

  • rate to control China's domestic economy. That means they will do things like suddenly  

  • devalue the yuan when they  need tolike they did in 2015.

  • So if you owned yuan, it was suddenly worth  less. This makes the yuan less stable as a  

  • store of value. But Chinese authorities were  more concerned with boosting China's economy  

  • than that fallout from devaluing the yuan.

  • So unless the Chinese Communist Party wants  to give up this level of control, the yuan is  

  • not going to become a global reserve currencyAnd they're not going to give up that control.

  • But the Chinese Communist Party is still using  the digital yuan to target the US dollar.  

  • I'll tell you how after the break.

  • Welcome back. So the Chinese Communist  Party failed at internationalizing the yuan.  

  • Which is why they're doing something  completely different with the digital yuan.

  • Instead of using the digital yuan to replace  the dollar in the global financial system,  

  • they're going to use the digital yuan to get  around the dollar and the global financial system.

  • China's central bank has said that one  reason they're developing the digital yuan is  

  • to protect [China's] monetary sovereignty”  from Bitcoin and other cryptocurrencies.

  • But as the Chinese Communist  Party has said for years,  

  • China's monetary sovereignty isn't just about  countering Bitcoin. It's about countering the US.

  • Especially US sanctions.

  • The chance to weaken the  power of American sanctions  

  • is central to Beijing's  marketing of the digital yuan.”

  • I'm sure Carrie Lam would rather be paid  in digital yuan than in piles of cash.

  • But it's not just about protecting  Chinese officials from US sanctions.

  • I'll let Chinese state-run CGTN explain.

  • Currently, cross-border RMB settlement is  highly dependent on the US SWIFT system,  

  • but these cross-border payment and banking  systems have been weaponized by the United States  

  • to impose financial sanctions on multiple parties.  

  • The digital RMB provides an independent  alternative for cross-border payments.”

  • Chinese propaganda is truly an art.

  • But basically state-run media is spelling  it out for us. The digital yuan can help  

  • countries evade US sanctions. Yeah, I can think of a few  

  • countries that might like to evade US  sanctions by using the digital yuan.

  • In fact, two years ago, a  wargaming exercise showed how  

  • North Korea could use the digital yuan to  neuter US sanctions and buy nuclear weapons.

  • We're all going to sleep well tonight.

  • But of course evading US sanctions is going to  take both a digital yuan and an alternative to  

  • the SWIFT cross-border payment system. Which  the Chinese regime is already working on.

  • China's central bank is separately  working on a joint venture with SWIFT,  

  • because they still want the digital yuan to be  used by people who aren't evading US sanctions.

  • In the end, the yuan might never  become the dominant global currency,  

  • because the Chinese Communist  Party won't give up its control.

  • But the digital yuan can become  a parallel global currency,  

  • creating a parallel payments system to the US.

  • The expansion of a Chinese  digital currency will ultimately  

  • pry open the U.S. grip over global  payments, and therefore compromise  

  • U.S. sanctions policy and a significant  measure of U.S. power in the world.”

  • The good news is that China is probably a yearor maybe a few years, away from being able to  

  • use the digital yuan to get around US sanctionsBut we should be paying attention to this now.

  • Chris?

  • Thanks, Shelley. So I'm curioushow is the US reacting to this?

  • Well, some experts have called  it a national security issue.

  • Yeah. It is. Good call.

  • But it's not totally clear how the  Biden administration sees the issue.  

  • According to anonymous officials  who talked to Bloomberg,  

  • they'restepping up scrutinyof the  digital yuan. Some officials are concerned.

  • But other officials don't seem to get it.

  • Bloomberg says that because China is working  with SWIFT, “U.S. officials are reassured  

  • that China's intentions aren't to use the  digital yuan to evade American sanctions.”

  • WHAT? Are they even paying attention?  

  • How can they think that China  *isn't* going to evade US sanctions?

  • I don't know, Chris. I guess they haven't  watched that Chinese propaganda cartoon  

  • where they specifically talk about using  the digital yuan to evade US sanctions.

  • Thanks Shelley. I'm definitely  going to sleep well tonight.

  • And now it's time for me to answer a question from  a member of the China Uncensored 50 Cent Army,  

  • fans who support the show on Patreon.

  • Lunar Worx asks, “Hey Chris. Do you think you'd  be able to cover the Taiwanese game developers  

  • Red Candle Games? They made video  games like Detention and Devotion,  

  • the later of which made themvictim of the CCP's cancel culture.  

  • And could we get someone on the China Uncensored  team to do a "Let's Play" of either game?”

  • You know I remember hearing  about those games As you said,  

  • Devotion even got pulled from Steam for  hurting the feelings of the Chinese people.

  • That was a few years ago. But video games are  always an issue for the Chinese Communist Party.  

  • Like how Blizzard censored players  supporting Hong Kong democracy.

  • Video games very often seem  to become political news.  

  • That's one reason Matt, Shelley, and I have been  thinking of starting a video game channel. Not  

  • only to play these politically sensitive gamesbut also as a forum for other conversations about  

  • politics. So now I'm going to ask a question. Is  that something you would watch? And do you have  

  • any suggestions for what you'd like to see onshow like that. Tell me in the comments below.

  • As for us playing Devotion, it's a  horror game. Shelley scares easy.  

  • I mean, I would play it, butwouldn't want Shelley to feel scared.

  • Thanks for your question Lunar Worx.

  • And thank you for watching. Once again  I'm Chris Chappell, see you next time.

China's new digital yuan

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