IT’S OLD news at this point, but China is once again targeting its crypto miners, specifically the ones who have managed to evade the authorities in the previous crackdowns.
A Zerohedge article I’ve read says Chinese miners are moving their operations into foreign countries just to continue their mining.
China’s anti-crypto-policy certainly has an effect on the cryptocurrency market, but that’s not what I want to discuss. Rather, I want to touch on what that policy tells us about the People’s Republic of China (PRC) and its outlook towards technology.
My take on this issue is that China will prioritize state stability over every other consideration. Crypto was designed as a tool for decentralization. It’s not perfect, but it’s the go-to medium of exchange if you want to buy and sell without having to worry about governments looking at your assets and financial statements.
And it is precisely that sort of power that the PRC wants to keep out of China. Crypto can be used to undermine the Chinese state, and therefore is considered a threat by China’s rulers. This is why even though China has the most prolific crypto miners, the PRC would rather not embrace that role.
I think China’s approach to crypto tells us that China will only tolerate those technologies and investments and ideas if they can be controlled by the PRC, otherwise it should be kept out, which brings us to another important point: Global Power.
A lot of people believe that China will replace the United States as the Global Hegemon. I disagree, and I would cite the PRC’s attitude towards crypto as a factor to support my thesis.
American global power is only partly driven by military and economic power. Another key factor of American preeminence is that it is the borrower and buyer of last resort. That is to say, it functions as the global commons for international trade.
That role has had negative effects on America, such as its trade deficit for example, and it is something built into the global system in order for it to work. America must open itself for trade and investment (including crypto trading). It cannot close itself despite the demands of a large portion of its own people (MAGA voters for example). To do so would undermine the global system.
If China is to replace the US, it must be able to do the same, and yet its crypto ban proves that it does not have the mindset for that role. This is why I don’t agree with those who claim that we are entering a Chinese-centered world order, for the simple reason that I think the PRC does not want that burden./PN
