US hopes new law will help counter the global expansion of Chinese comms technology

• Concerns rising as China's economic and military power grows
• Solution: Technology partnership between US high tech industry and companies in democratic nations
• "Leverage alliances abroad and fight China’s predatory practices"
• Meanwhile China pushes ahead with its digital currency, the electronic Yuan (eCNY)

The US government is looking to create a new office within the State Department that will facilitate and co-ordinate partnerships and joint ventures between high-tech American companies and trusted counterparts "in other democratic nations" to promote R&D and set standards for  new and emerging technologies including AI, 5G, 6G, semiconductors and quantum computing to compete more aggressively and effectively with China. The proposed and bi-partizan "Democracy Technology Partnership Act" is yet more evidence of the real and deepening concern in the US that could soon fall behind the technological developments being made in a bullish and expansionist PRC.

The new bill was introduced late last week by the Senate Intelligence Committee Chairman, Mark Warner, who is a Democrat representing the state of Virginia. He is a leading member of a group of both Democrat and Republican senators. He said, "The Chinese Communist Party is working to surpass the US technologically and economically and to export their technologies globally, To compete and counter the expansion of Chinese dominance in critical technology sectors, we need to create a strategy that leverages the power of American partnerships to protect and advance our technological edge."

He added, "This bipartisan legislation will help foster partnerships among the US  and like-minded democratic countries to better protect and compete against China in critical emerging technologies while helping set global rules, standards, and protocols for the market." The new law will also calls for the development of agreed new international strategies to provide new western designed and manufactured technologies as economically viable alternatives for developing economies to purchase rather than buying from "athoritarian regimes", for which read "China".

Another leading sponsor of the bill, Senate Majority Leader Charles Schumer, a New York Democrat, commented, "Both Democrats and Republicans know that competing with China is one of the biggest challenges in the 21st Century. This initiative is an important next step in our mission to boost American competitiveness, leverage our alliances abroad and fight China’s predatory practices."

US relationship with China: "Competitive when it should be, collaborative when it can be and adversarial when it must be" 

From the Republican side, the Vice-Chairman of the Senate Intelligence Committee, Marco Rubio of Florida stated, "Too many nations fall prey to the trap of incentives associated with Chinese technology that only results in lost privacy, reduced autonomy, and greater dependence on Beijing. The US must lead likeminded countries in establishing and supporting alternatives that are safer and technologically more advanced."

The bill has been endorsed and recommended by several leading politicians from earlier administrations, including Madeleine Albright, who was Secretary of State during the presidency of Bill Clinton. She said,"The Technology Partnership being proposed would be a powerful diplomatic tool to counter authoritarian influence. It would also promote new avenues of co-operation between democratic nations to secure a better future for us all."

The fact that the new legislation is being endorsed by so many politicians from both parties representing a nation that has been deeply divided by the poisonous intensity of deeply-held but diametrically opposed political philosophies over the past four years indicates just how seriously the perceived threat from China is being taken.

The day before the new bill was introduced President Joe Biden's Secretary of State, Antony Blinken, gave his first full speech in office and he used it identify an increasingly aggressive China as a key threat to western democratic values. He said, "China is the only country with the economic, diplomatic, military and technological power to seriously challenge the stable and open international system and all the rules, values and relationships that make the world work the way we want it to. Our relationship with China will be competitive when it should be, collaborative when it can be, adversarial when it must be."

Make no mistake, this is serous stuff.

Electronic yuan means more centralised control over the Chinese people

Meanwhile, China is now ahead of the entire world with the development of its national digital currency, and that includes the US which is has made slow progress with the technology and is a long way behind the curve. Development in China began in 2014 and the central bank is now beta-testing the "electronic Chinese Yuan, (eCNY) in Beijing, Shanghai and Shenzhen, after first trialling it trying it out in the cities of Chengdu, Shenzhen, Suzhou and Xiongan during 2020.

The People's Bank of China has been waxing triumphalist on the eCNY in recent months claiming that the electronic currency will be the world's first, biggest and will become important enough to compete head-to-head with the US dollar as a global currency especially given that digital currencies can avoid traditional banking and financial barriers and move around the world at two-thirds of the speed of light at the push of a button. As far as shorter term prospects are concerned senior Chinese government officials have said the eCNY will be ready and available in time for tourists to use at the Beijing Olympic Games next year. 

The September 2020 edition of China Finance, the magazine of the People's Bank of China, an editorial stated, "The right to issue and control digital currencies will become a ‘new battlefield’ of competition between sovereign states. China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate to seize the first track."

In many parts of the world, the crypto-currency Bitcoin (and a few others) have been growing in acceptance, popularity and value. The eCNY has adopted a few technical pointers from Bitcoin but is a very, very different animal. From its initial conception Bitcoin was designed to be decentralised to ensure that no one country or corporation could dominate or control it. 

The Chinese and system is totally centralised and totally controlled by the People's Bank which is an important and powerful arm of the state. The eCNY does not use blockchain technology, the data structure system used by the Bitcoin and other western crypto-currencies to holds records of transactions while ensuring security, transparency,and decentralisation and is not controlled by a single overarching authority.

Trials of the eCNY have shown that money credited to the app starts to lose value if it is not spent within a limited time-frame. It literally wipes itself away week-by week until nothing is left so consumers are "encouraged" to spend what's there while it is still there in full. Obviously the ability to determine the rate of decay of the value of the electronic currency gives the authorities great power to monitor the financial tides and tweak the economy more or less in real-time. Where this leaves other systems such as Alipay and WeChat Pay is anyone's guess.

The most ominous aspect of the new system is that the Chinese authorities will be able to record and track any and all e-currency transactions, and that means everything from buying a bunch of bananas to a meal out, a tv, a car and fuel for it - on and on it goes. 

Users will be tracked, traced, categorised, measured and assessed for compliance and then graded and rewarded or punished according to how good a citizen the algorithms say they are. The authorities will know who you are, where you live, where you go, when your were there, what you bought or did, what types of transactions you undertake and their frequency - and whether those transactions are currently approved by the powers that be or not.

Already subject to some of the world's most intrusive and insidious government surveillance via ubiquitous facial recognition systems, spy cameras everywhere and routine tracking every time they use a credit or debit card, the ordinary Chinese man or woman will soon have what little that is left of their personal privacy further eroded when the electronic yuan is introduced and the dystopian nightmare deepens. How long will it be before the daily use of the eCNY becomes compulsory and cash is outlawed? How long before another triumphant technological development and the thought crime police come to the door at three o'clock in the morning to take people away for "re-education".