If China continues to do to the Chinese what Argentina did to Argentinians concerning their fiat currencies, China will suffer the same fate and destroy the value of its currency, because the pressure of the laws will push the value and utility out of the Yuen.
The harder it is to use a service (currency), the more incentivized people become to opt out of that system, and to search for an alternative.
The more control governments seek over their currency, the less people want to use it, and the more utility value is lost because the control is driven by fear, and since fear is choosing to believe something bad will happen, the more actions are taken based on that fear, the more likely what they fear will manifest.
In this case, Mainland Chinese leaders are terrified they’ll lose the value of the Yuen, and therefore lose the value of, and destroy their economy. But their actions to ban Bitcoin mining and exchanges will hasten what they fear, in part by destroying the utilitarian value of the Yuen.
If they want to avoid the flight of the value of the Yuen, it would behoove them to make the Yuen the most utilizable currency in the world.
- Make it stupid easy to buy and sell crytocurrencies in China.
- Make the Yuen easy to interact with other financial systems, for instance, to use the debit cards of banks in China usable in the United States.
- Make it as easy as possible for people in China to mine Bitcoin and other crytocurrencies. China is uniquely positioned to do this through its’ propensity for practical tech, e.i. mining rigs.
Enacting these policies and regulatory changes would create a sunbstancial interest in mining crytocurrencies in China, and the production of mining rigs, and therefore increase manufacturing jobs.
If it had the foresight, China could create a second wave of economic prosperity for its’ people as the world moves towards the globalization of currency through technology. China is presently trying to revitalize its’ economy through a shift towards lending, nationally and internationally for various projects. If it can create net assets through these actions, it can create wealth for the national government and a few at the top, but this will increase wealth disparities, and hence the chances of civil unrest.
On the contrary, if China enacted monetary policy in the spirit of what I’ve proposed, they could create a chain reaction of wealth creation that would lift millions out of poverty, because then, since capital flows to where it is best utilized, capital would start flowing into China to create new factories to manufacture the components necessary to build mining rigs and associated components, and therefore new jobs. Right now, the cost of GPU’s is going through the roof, and China could be producing to meet that demand.
If the policies I’ve proposed were enacted, it would be easier to get money out of China, and people would be incentivized to put money into it to make money on their investments. Hence the ease of capital flow into and out of China’s Yuen, the utilizability of it to produce mining rigs and their components, and its’ usefulness as a global currency would change the face of China, its’ government, its’ people, and the world.
But the shortsightedness and paranoia and fear based decisions made by the Chinese government will erase that future, and create a more impoverished society.
It therefore becomes plausible that the Chinese government doesn’t want its’ people to become too wealthy, but to artificially hold them below a standard of living which enables them to maintain an authoritarian government, since a socioeconomic ascent of its’ people past a certain level would result, functionally if not actually, in a conversion to some version of a constitutional republic.
China gets to choose its’ future. Either to be a nation that repeats the mistakes of its’ historic isolationism, or to embrace with open arms the technological revolutions taking place, either to hold the sword of human advancement and cut a swath for their people to traverse, or be cut down by that sword as globalism and technology blaze a trail to the future for the 7.5 billion people on Earth, and our descendents.
The choice is theirs.