The People’s Bank of China, the nation’s central bank, has trumpeted its success suppressing Bitcoin and online lending.
A WeChat post from the Bank outlines how it has spent the last five years enacting the wise guidance of China’s president Xi Jinping, with efforts that translate as “comprehensively cleaning up and rectifying the financial order”.
Among the accomplishments in that field, the Bank claims it has continued to crack down on domestic virtual currency trading speculation. Those efforts led to “China’s domestic Bitcoin trading volume dropping significantly in the world.”
It’s unclear if the absence of a mention of cryptocurrency mining is an artefact of machine translation or an intentional choice of words.
But a sentence claiming “The special rectification of internet financial risks has been successfully completed, and nearly 5,000 P2P online lending institutions have been closed” has clear meaning. China dislikes peer-to-peer lending because it’s regarded as too hard to regulate and therefore a risk to the economy. Which is the main reason Beijing called off the IPO of Alibaba’s financial services company Ant Group, which facilitated P2P loans online.
The government Xi leads has since made much of bringing all of China’s big tech players to heel, so that their innovation and growth serves the nation and does not result in concentrations of market power. Beijing is also very keen to ensure that prominent CEOs don’t achieve fame and prestige to rival that of senior government figures – like, say, for example, Xi.
The timing of the Bank’s post may matter as much as its content. It comes ahead of the October 16 kick-off of the 20th National Congress of the Chinese Communist Party.
At that event, Xi is expected to be re-appointed for an unprecedented third term as China’s president. No other Chinese head of state – even Mao Zedong – has served longer than Xi, and if appointed to a third term he will potentially lead the nation for five years longer than any predecessor.
The Bank’s post therefore serves to remind the nation of Xi’s record, and the efficacy of his policies.
But the post also offers a rosy view: just last week authorities reported the arrests of 93 people accused of using virtual currencies to launder $5.5 billion.
That group’s operations reflect the fact that China has tried to ban cryptocurrency mining and use for years but has felt the need to re-state the ban often. Even after years of edicts that make it plain crypto is not welcome, Chinese courts have ruled crypto coins can be considered an asset.
Crypto may therefore be officially under control in China, but the reality appears to be different. And Xi will likely be reappointed regardless. ®