Communist China is adding another element to its toolbox of surveilling and controlling its population. Already known as the country in the world with the most pervasive surveillance and social credit system, China has now created a digital currency, the digital renminbi or yuan — also known as Digital Currency Electronic Payment (DCEP) — to ensure that hardly any transaction goes unregistered.
Unlike cryptocurrencies such as bitcoin, which are not issued by governments and therefore cannot be used as means of payment in most daily transactions, China’s digital currency is issued and controlled by China’s central bank.
According to the Wall Street Journal, the currency “is expected to give China’s government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.”
“DCEP is the antithesis of Bitcoin. The ultimate goal of a cryptocurrency is the separation of money and state,” said Stewart Mackenzie, a cryptocurrency expert based in Hong Kong. “It’s easy for them to say that it’s like Bitcoin when it’s worlds apart.”
The real purpose of the new digital currency, however, seems to be to challenge the long-standing global reign of the US dollar. “China must brace for a full-blown escalation of the struggle with the United States and prepare to gradually decouple the Chinese yuan from the US dollar,” Zhou Li, a former deputy director of the Communist Party’s International Liaison Department wrote in July 2020. “By taking advantage of the dollar’s global monopoly position in the financial sector, the US will pose an increasingly severe threat to China’s further development.”
China has been working on the digital yuan since 2014 and launched it as a pilot project in four Chinese cities last year. The digital currency has since been expanded to 10 cities and provinces covering 100 million people, where the pilot has been conducted in the form of lotteries. In Shenzhen, for instance, the government gave away a total of 10 million yuan (about $1.5 million) to about 50,000 people, which they could then use with 3,000 local merchants after downloading a digital renminbi app.