On September 28, the 2024 Tsinghua PBC Chief Economist Forum was held in Beijing. Zhu Guangyao, former vice minister of the Ministry of Finance, attended and delivered a speech.

In his speech, Zhu Guangyao called for attention to the study of the development of cryptocurrency. "It does have negative effects, and we must fully recognize its risks and harm to the capital market, but we must study the latest international changes and policy adjustments because it is a crucial aspect to the development of the digital economy."

The following is Zhu Guangyao’s speech:

The current development of the digital economy should be said to be leading the overall trend and direction of global development. Since the beginning of this year, with the breakthroughs in artificial intelligence and other technologies, I think we have entered the fourth industrial revolution, or the fourth industrial revolution has begun. Well, this time China is indeed different from the past three industrial revolutions. We are standing in the first team and the first echelon, or the United States and China are now leading the development of the digital economy. Of course, we must admit the gap between China and the United States, that is, in the aspect of 0 to 1, the United States is indeed still playing a leading role. However, China has the largest application scenario of the digital economy, and we have indeed accumulated a relatively strong accumulation in some innovative fields, in the cultivation of talents, and in technical experts.

As you can see, the EU's recent research report on the digital economy and productivity competition chaired by former European Central Bank President Draghi clearly stated that there is a gap between Europe and the United States and China. Therefore, Europe must increase huge investments to catch up, but I think in this process, the overall development trend of the digital economy is now in the next ten years, and it should be said that the fourth industrial revolution is in full swing.

When it comes to infrastructure, the front end is the mobile phone that everyone uses, which is our platform. These are the front end. However, the key infrastructure at the back end is the data center, which is the optical cable that ensures the operation of the network. So, intercontinental optical cables are crucial. In the context of globalization, more than 99% of intercontinental data now operates through submarine optical cables. But in this regard, the United States has 3 of the world's 20 largest supercomputing centers, the United States has 17, Europe has none, and Japan has none. So, we are now in the first echelon. It is true that under the guidance of the new development concept and the innovative theory of "innovation, coordination, green, openness, and sharing", we have made great achievements since the 18th National Congress of the Communist Party of China. But the challenge we are facing now is that the United States passed the "Clean Network Plan" in 2020, which was hosted by the Trump administration at the time, but it is still being implemented. A key area is submarine optical cables. Now the United States is trying every means to force American companies not to cooperate with China.

At the same time, Chinese companies have huge engineering and construction capabilities. However, they tried every means to block it. The United Nations has clear data now, that is, 49% of global data exchange is in the United States, 24% in Europe, 22% in East Asia, and China is 9%. However, if you cut off the intercontinental network, that is, decouple the United States and China, then the loss to the United States will be reduced by 12%, that is, 49% will be reduced to 37%, and China will drop from 9% to 7%, which is a huge loss for both sides.

The most dangerous thing is that in the next ten years, the fourth industrial revolution driven by artificial intelligence will be affected by this decoupling. Two parallel markets and two parallel supply chains will cause a loss of 7%-12% of the global economy, that is, 7 trillion to 12 trillion. I just reported that the global economy was 105 trillion last year. So, such a huge economic loss. Therefore, no country can bear it alone. It is extremely dangerous. Therefore, we must return to this globalization process, return to the major economies, and communicate closely on important economic policies.

Then, another aspect is what the digital economy brings. I just talked about infrastructure, and now there is a special asset in the digital economy - cryptocurrency. For the past decade or so, the United States has unanimously believed that:

1. It has a huge destructive effect on international anti-money laundering and international anti-terrorist financing.

2. It has a huge impact on the market, because the sharp fluctuations in its value have a huge impact on the international financial market.

However, this year, the US policy has undergone a major evolution. First, the Republican Party platform clearly listed the development of cryptocurrency as its campaign platform. At the same time, it also clearly stated that China must be excluded. Trump also publicly said during the campaign that we must embrace cryptocurrency and deny that China will replace us. His vice president candidate, Vance, is a venture capitalist himself and has a large cryptocurrency asset.

Trump, the executive branch, the Biden administration, said that he would fire the chairman of the SEC, which is currently restricting the development of digital currencies, on his first day in office. But it was him, the current chairman, who approved 11 Bitcoin ETFs to be listed on the New York Stock Exchange, the Nasdaq Stock Market, and the Chicago Mercantile Exchange in January this year. This marks that the US government recognizes the legitimacy of Bitcoin. In July, its second ETF, Ethereum, was listed again.

Therefore, even though the current Securities and Exchange Commission in the United States, which Trump accused of implementing various policy restrictions on the development of Bitcoin, and the attitude of the entire Biden administration, have actually undergone a fundamental change. Then, in emerging market countries, in the BRICS countries, in September this year, Russian President Putin officially approved cryptocurrency, and in fact South Africa, Brazil, and India had already been doing it before. So, if we say that the development of digital currency now does have a negative impact on cryptocurrency, we must fully realize its risks and harm to the capital market.

However, we must study the latest changes and policy adjustments in the international community, especially the impact of the policies of the Republican and Republican parties in the United States, because it is a crucial aspect for the development of the entire digital economy. Thank you!

Ju Jiandong asked Zhu Guangyao: We recall that before 2015, China's digital currency technology was leading the world, and it was called mining at that time. Now nine years have passed, how far do you think we are behind?

Zhu Guangyao: Now it is actually closely related to the development of chips, because if you don't use it, what are we worried about? One is what I just said, that was repeatedly said by the Americans and us at the G20, just now the anti-terrorist financing and anti-money laundering have been severely impacted, especially the violent fluctuations in the capital market, is there this? Yes.

But how to solve the problem in terms of supervision? It should be solvable. The gap we have now is that you don't participate, but I said that even if you restrict it, there will be transactions through underground channels, but you will not be able to use the production capacity because you are prohibited by law. Therefore, we have to study new issues, that is, a communiqué of the Central Political Bureau meeting, to face the problem, discuss and solve it.