China’s Digital Currency and Monetary Warfare

by | Apr 22, 2021 | Blog Articles, China

The Chinese Communist Party (CCP) is playing the long game to establish its dominance and supplant the US as global hegemon. This is not conjecture but the stated policy objective of the CCP. The application of this overarching strategic objective for China’s resurgence on the world stage is no less relevant to the area of monetary policy than it is to political, military, and commercial realms.

Here is what we might expect from China in this area.

First, China needs to develop an alternative global financial infrastructure outside of the US led and controlled system. As long as the US has the economic equivalent of the nuclear threat to sanction China’s banks and disconnect the entire Chinese banking system from the rest of the world, their options for acts of aggression (e.g. annexing Taiwan) may be limited.  Secondly, China needs to ensure a slow and controlled bleed of America’s monetary lifeblood, weakening the dollar and the US’s financial power over time. This must be gradual so as not to prematurely precipitate a massive devaluation of the dollar, which would not be in China’s interests.

 

Read the full article China’s Digital Currency and Monetary Warfare on Jackson Hole Economics