U.S To Counter Blockchain And Digital Currency Ambition Of China
In the October 23 Congress hearing on Facebook’s digital currency ‘Libra,’ the founder and CEO of the social media giant, Mark Zuckerberg, warned Washington that blocking Libra would pave to China’s growing technological dominance, which would ultimately threaten America’s democratic values.
Zuckerberg’s statements, though ominous, fit into the rhetorical structure of the clash for technological supremacy between the world’s two largest economies, the U.S. and China. Classified as a revisionist power by the Trump administration, China is at the limelight of technological innovations, since 2014.
During a meeting last month, President Xi Jinping sanctioned blockchain as the nation’s core technology. China’s plan to launch a sovereign digital currency is also triggering new appetites for start-ups, traders, investors, and researchers.
As the underlying technology of digital currencies such as bitcoin and Libra, blockchain technology is a distributed, decentralized, and public digital ledger system that allows information and data to be immutably stored and transparent to all. The blockchain technology promises unparalleled efficiency, security, and transparency and carries profound implications in a variety of scenarios, from finance to manufacturing and energy.
Blockchain in finance can help traditional banks reduce operation costs, allowing individuals to perform transactions in a secure environment. The technology is also set to be involved in the development of smart, digitally connected cities. Blockchain-enabled parking platforms, for instance, would provide real-time information on parking spaces for drivers to reserve spaces, thus reducing congestion and on-street parking.
In the private sectors, demand for blockchain solutions for
Supply chain and logistics are quickly expanding. In a traditional supply chain, payments can take up to days, and contractual agreements involve different layers of third-party costs; the increasing globalization and complexity of trade make it almost impossible to trace products back to the source, compromising supply-chain integrity.
According to PwC, 40% of food companies realize food fraud severe to identify with current methods, and 39% believe their products are simple to fabricate. Blockchain technology could be the answer to such supply-chain frictions.
China’s three-layered development model has lent resilience for its development. The central government sets the overarching strategy of developing a technologically advanced, innovative society while thriving entrepreneurial, private-sector companies drive business innovations, with local governments in the middle as liaisons.
Guangzhou’s Huangpu Development district authorities, for instance, recently published regulations on blockchain use to cater for a significant increase in applications, while a blockchain platform was launched last year in Shenzhen to serve the Guangdong-Hong Kong-Macau Greater Bay Area.
The U.S., meanwhile, is unsettled by China’s rapid expansion into the frontier technologies. President Donald Trump is set to help the U.S. solidify, or regain, its position as a global innovation hub, despite his complicated love-hate relationship with the tech industry.
In February, Trump signed an executive order to maintain America’s leadership in artificial intelligence. Last month, the White House revived the President’s Council of Advisors on Science and Technology, a group of experts who work to inform public policy on science, technology, education, and homeland security.
The private sector is an essential source of innovation in the U.S., as epitomized by Google’s milestone achievement in quantum computing – a technology that will produce a healthy symbiosis with artificial intelligence and cryptography.
The de facto punchline of Trump’s tech move, though, was to cut Chinese companies off America’s technology value chain, especially the core scientific know-how. Over the year, Washington repeatedly put pressure on Chinese telecom equipment and smartphone maker Huawei and blacklisted it, citing the company’s alleged coziness with the Chinese government, while reining back China’s dominance in 5G technology. Another 28 Chinese companies later added to the blacklist, including the supercomputer maker Sugon along with three of its microchip subsidiaries.
A.I. and human rights to be entangled in the US-China tech war?
Given the energy and pace at which the conflict is intensifying, Zuckerberg’s warning is not unjustified. If China’s digital currency is adopted in more countries, America’s supervision and regulation of the world financial system will become challenging. This gap will only escalate as the two countries deviate further into separate paths of technology.
The adverse competition will result in a zero-sum game. Continued blacklisting will do more damage than good, inflicting havoc on jobs and disturbing the global technology supply chain. As China develops applications of the blockchain system, it should adopt best practices and international benchmarks, and develop a clearer, full-bodied legislative framework.
Though differences exist and will continue to exist, the world will gain if the two leading economic powers can follow commonalities, rebuild trust, cooperate on technological initiatives, and establish global governance and a code of conduct on blockchain technology as well as its applications. After all, increasingly, the issues facing humanity transcend national borders and require big powers to work together.
On the business level, such partnerships are already happening. For instance, IBM, Walmart, JD.com, and Tsinghua University launched a project in December 2017 to establish food safety solutions using IBM’s blockchain platform. The project also involved significant food suppliers such as Dole and Kroger, advancing offline and online customers across the world.
On a global level, blockchain’s capable trade-related applications can revolutionize various aspects of international trade, like finance, customs and certification processes, logistics, and intellectual property. But for the technology to entrust global growth, countries will have to cooperate.