Why is it important to monitor, what is going on in China?
China’s political power is growing also thanks to a strong rebound from the pandemic. China’s financial markets are picking up record investments from global capital, mainly from US-based investors. Above all, the markets are ready for further growth, and that would mean further growth in political power.
Why it matters
Political leaders, if more and more money flows into the markets, will have the leverage to grow their power, which would give China a powerful weapon and could undermine the US position as a world leader. If this happened, it could change the course of many things.
What they’re saying
We hear that this is an attempt to bring Renminbi closer to international activities. Renminbi is a digital currency that aspires to work within or like Alipay, WeChat Pay like a payment instrument.
What it could mean
This Chinese digital currency could become more important if investors are forced to buy assets in that currency. Chinese markets are lucrative and a lot of investors and companies are investing on them. China is trying to make investors to hold Renminbi, as this currency was made for investors to hold and trade with, and most importantly – to be used worldwide without crossing the borders of China. China is protecting it’s own currency with digital Renminbi.
Why the growth matters
Chinese markets are becoming more lucrative and China could use this situation for geopolitical gain. Investors investing in Chinese markets could strengthen Beijing’s ability to enforce its laws, for example by freezing accounts considered owned by any political opposition. Furthermore, should China succeed in the global race for central bank digital currency (CBDC) and should the chinese digital currency take gradually over the global digital transactions instead of the USD, it would give China much more political and monetary power.
$ 17 trillion, which is the market capitalization of Chinese companies listed on continental, Hong Kong and overseas indices, such as the New York, London and Singapore stock exchanges (of which $ 11.7 trillion on continental exchanges). This is the power of the Chinese asset market.
China is a power that has to be taken into consideration and it is doing everything possible to gain advantage in the race for the global leader position. Chinese CBDC would be a great leap ahead of the United States and European Union, who are still hesitating. It would also change the way people view money now and digital currencies would become something common.