Author of best selling book, The Coming Collapse of China, Gordon Chang, is not optimistic about a loosening of legislation surrounding Bitcoin and cryptocurrencies following the 19th National Party Congress. Rumours have long circulated that with the change in leadership will come a more liberal attitude towards digital currencies.
Speaking with The Street, Chang expressed his pessimism. He cited Bitcoin’s anti-authoritarianism and expressed doubt that an autocratic state would allow its unrestricted use. The author and Chinese economics expert then went on to highlight Bitcoin and other crypto’s use in evading capital controls. The ease with which citizens can expatriate money is “making a mockery” of lawmakers. This, for Chang, is what gave rise to the current clampdown.
Chang also mentioned the proposal by the People’s Bank of China to introduce their own digital currency. He observed the obvious conflict of interest between a crypto and central banks:
I think the most fascinating thing are comments from the People’s Bank of China, about China developing its own sovereign digital currency, sort of as a replacement for Bitcoin. This is going to be fascinating to watch because the Chinese central bank is going to want to have control and the reason why these cryptos are so popular is because they take control away from the government and give it to the people, so this is going to a struggle.
The crux of the author’s argument lies in the fact that the current Chinese leadership have exerted greater control over the economy and markets. For him, allowing greater use of cryptocurrency runs contrary to the previous actions by the government and thus he doubt any large U-turn in policy would occur. In his own words:
“We have seen this so far, there has been the prohibition on ICOs and the closing of exchanges and everyone is thinking that this was in the run-up to the Congress. Under the current leadership, there has been an attempt to impose more control, not over only the economy but also the markets. So any sense of allowing Chinese citizens to export currency is just counter to what the government has been doing. I think what we will see is more of that trend after the Congress, but we will have to wait and find out – but I don’t think signs are good for liberalization in the coming months.”
Since the ban in September on initial coin offerings, and the subsequent closure of domestic exchanges in China, many have looked towards the date of the 19th National Congress as a likely point for the Chinese ruling party to begin to relax their legislation on cryptocurrencies, under their own terms. With the congress ending Tuesday, it shouldn’t be too long before the crypto currency world learns exactly which role the great Eastern power will take in the rapidly evolving space.