Written by: Golden Finance
On September 28, 2024, Zhu Guangyao, former vice minister of the Ministry of Finance of China, said at the 2024 Tsinghua PBC Chief Economist Forum that the digital economy has a special asset "cryptocurrency". In the past decade, the United States generally believes that cryptocurrency has huge destructive power and market risks. However, the encryption policy of the United States has undergone major changes since 2024, and China needs to study the latest changes and policy adjustments in the international community. Zhu Guangyao bluntly stated that the current gap between China and the United States in cryptocurrency is that "China does not participate", and called for facing the problems and solving them in regulation.
On September 29, 2024, Golden Finance first reported the news, which caused a huge response. Golden Finance compiled the content of Zhu Guangyao's speech on cryptocurrency based on his speech video.
The following is a transcript of Zhu Guangyao’s speech on the indistinguishability of cryptocurrencies (subheadings added by the editor):
The general trend of digital economy is the fourth industrial revolution, and China is in the first echelon
The current development of the digital economy can be said to be leading the overall trends and movements of global development.
We have seen breakthroughs in AI technology this year. I think we have entered the fourth industrial revolution, or the fourth industrial revolution has begun. Compared with the past three industrial revolutions, China is indeed different this time. We are 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 acknowledge the gap between China and the United States, that is, from 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 foundation in some innovative fields, talent training, and technical experts.
In a recent EU research report on the digital economy and productivity competition chaired by former European Central Bank President Mario Draghi, he clearly stated that there is a gap between the EU and the United States and China. Therefore, Europe must increase huge investments to catch up.
The overall development trend of the digital economy can be said to be the fourth industrial revolution, which will mature in the next decade.
A key area of the digital economy is submarine optical cables
The infrastructure of the digital economy. At the front end, it is the mobile phone that each of us uses, which is our platform. At the back end, the key infrastructure is the data center, which is the optical cable that ensures the operation of the network. Intercontinental optical cables are crucial. In the context of globalization, more than 99% of intercontinental data now operates through submarine optical cables. Among the 20 largest supercomputing centers in the world, China has 3, the United States has 17, Europe has none, and Japan has none. The United States is leading in this regard.
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, greenness, openness and sharing", we have achieved tremendous results since the 18th National Congress of the Communist Party of China.
But we are now facing challenges. In 2020, the United States passed the Clean Network Plan under the auspices of the Trump administration, and it is still being implemented. A key area is submarine optical cables. Chinese companies have huge engineering and construction capabilities, but now the US government is trying every means to force American companies not to cooperate with China.
The United Nations has clear data that 49% of global data is exchanged in the United States, 24% in Europe, 22% in East Asia, and 9% in China. However, if the intercontinental network is cut off, that is, the United States and China are decoupled, then the loss to the United States will be reduced by 12%, that is, from 49% to 37%, while China will drop from 9% to 7%, which is a huge loss for both sides.
In the next decade, the fourth industrial revolution will be driven by artificial intelligence. Affected by this decoupling, two parallel markets and two parallel supply chains, the International Monetary Fund estimates that the loss is 7%-12% of the global economy of 105 trillion US dollars, that is, 7 trillion to 12 trillion US dollars. Therefore, no country can bear such a huge economic loss alone, and it is extremely dangerous. Therefore, we must return to this globalization process, and major economies must communicate closely on important economic policies.
Cryptocurrency: A major evolution in U.S. policy
On the other hand, there is a special asset in the digital economy today - cryptocurrency.
Over the past decade, the United States has unanimously agreed that cryptocurrency: 1. It has a huge destructive effect on international anti-money laundering and international anti-terrorist financing. 2. It has huge market risks because the sharp fluctuations in its value have a huge impact on the international financial market.
However, this year there has been a significant evolution in U.S. policy.
1. The Republican Party platform clearly lists the development of cryptocurrency as its campaign platform. At the same time, it also clearly states that China must be excluded. Trump also publicly said during the campaign that the United States must embrace cryptocurrency and deny that China will replace the United States. His vice presidential candidate Vance is a venture capitalist himself and holds a large amount of cryptocurrency assets.
2. The executive branch. Trump said that he would fire the current SEC chairman who is restricting the development of digital currencies on the first day of his presidency. But the current SEC chairman approved 11 Bitcoin ETFs to be listed on the New York Stock Exchange, Nasdaq, and Chicago Mercantile Exchange in January this year. This marks that the US government recognizes the legitimacy of Bitcoin. In July, the Ethereum ETF was approved for listing.
Therefore, even the current U.S. SEC, which has been accused by Trump of implementing various policy restrictions on the development of Bitcoin, and the attitude of the entire Biden administration have actually undergone a fundamental change.
In the emerging market BRICS countries, Russian President Putin officially approved cryptocurrency in September 2024. In fact, South Africa, Brazil, and India have already been doing it before.
So, now when it comes to the development of digital currency, cryptocurrency does have negative effects, and we must fully recognize its risks and harm to the capital market. However, we must study the latest changes and policy adjustments internationally, 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.
How China responds
Moderator: Thank you, Minister Zhu. Let's recall that before 2015, when it was called mining, China's digital currency technology was leading the world. Now nine years have passed, how far do you think we are behind?
Zhu Guangyao: Mining is actually closely related to the development of chips.
What are we worried about? It is what I just said, that anti-terrorist financing and anti-money laundering are severely impacted by cryptocurrencies, especially the sharp fluctuations in the capital market. This is what the Americans and we have said many times at the G20.
Does cryptocurrency have these hazards? Yes. But how can we solve the problem in terms of regulation? It should be solvable. The gap we have now is that even if you do not participate, transactions can still be made through underground channels, even with such restrictions. But you do not have the ability to use production because you are prohibited by law.
Therefore, we have to study new problems. According to a communiqué of the Central Political Bureau meeting, we must face the problems, discuss them, and solve them.
