China’s central bank declares victory over Bitcoin • The Register
The People’s Bank of China, the country’s central bank, has trumpeted its success in cracking down on Bitcoin and online lending.
A WeChat post by the bank outlines how it has spent the past five years adopting the wise guidance of Chinese President Xi Jinping, with efforts that translate as “comprehensive clean-up and improvement of the economic order”.
Among its achievements in this field, the bank claims that it has continued to crack down on speculation in domestic virtual currency trading. These efforts led to “China’s domestic Bitcoin trading volume falling significantly in the world.”
It is unclear whether the absence of a mention of cryptocurrency mining is an artifact of machine translation or an intentional choice of words.
But a sentence that claims “The particular remediation of financial risk on the internet has been completed, and nearly 5,000 P2P lending institutions have been closed” has a clear meaning. China dislikes peer-to-peer lending because it is considered too difficult to regulate and therefore a risk to the economy. Which is the main reason why Beijing suspended the IPO of Alibaba’s financial services company Ant Group, which facilitated online P2P loans.
The government Xi leads has since done much to bring all of China’s major technology players to heel, so that their innovation and growth serve the nation and do not result in concentrations of market power. Beijing is also very keen to ensure that prominent CEOs do not gain fame and prestige that can rival that of senior government figures – such as Xi.
The timing of the bank’s post can be just as important as the content. It comes ahead of the October 16 kick-off of the 20th National Congress of the Chinese Communist Party.
At that event, Xi is expected to be re-appointed for an unprecedented third term as China’s president. No other Chinese head of state – even Mao Zedong – has served longer than Xi, and if he is appointed to a third term, he will potentially lead the nation for five years longer than any predecessor.
The bank’s post therefore serves to remind the nation of Xi’s record, and the effectiveness of his policies.
But the post also offers a rosy view: Last week, authorities reported the arrests of 93 people accused of using virtual currencies to launder $5.5 billion.
This group’s activities reflect the fact that China has tried to ban cryptocurrency mining and use for years, but has felt the need to re-impose the ban frequently. Even after years of edicts making regular crypto unwelcome, Chinese courts have ruled that crypto-coins can be considered an asset.
Crypto may therefore be officially under control in China, but the reality seems to be different. And Xi is likely to be reappointed anyway. ®
