China could use digital currency to dodge US sanctions in Taiwan crisis
Chinese Communist Party officials see an emerging “digital currency” as a bulwark against Western economic sanctions in a crisis, according to a British spy chief.
“Be in no doubt, the Chinese Communist Party is learning the lessons from that conflict,” GCHQ Director Jeremy Fleming told the Royal United Services Institute.
Western officials have held out hope that Russian President Vladimir Putin’s struggles in Ukraine would discourage Chinese General Secretary Xi Jinping from launching a war to subjugate Taiwan, an island democracy of strategic importance to both the United States and China. Fleming’s overview emphasized that Beijing is pursuing high-tech capabilities intended to maintain control over the Chinese populace and neutralize Western military and economic advantages.
“Control is also a major driver for Beijing as it seeks to build a centralized digital currency,” he said Tuesday. “It might, in the future, also enable China to partially evade the sorts of international sanctions currently being applied to Putin’s regime in Russia. Be in no doubt, the Chinese Communist Party is learning the lessons from that conflict.”
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Such a monetary innovation could complement the suite of technologies that, in Fleming’s telling, reflect China’s desire to claim a privileged position in the global economy while reinforcing its surveillance and military capabilities. He singled out the Beidou satellites, China’s “rival alternative to the established GPS network,” as a potential asset for both foreign and domestic control.
“The Party has used every lever to force Chinese citizens and businesses to adopt it — and for it to be built into Chinese exports to more than 120 countries now around the world,” he said. “If we price in the motivations I’ve been describing, you can see it’s part of a concerted strategy. Many also believe that China is building a powerful anti-satellite capability, with a doctrine of denying other nations access to space in the event of a conflict. And there are obvious fears that this technology could be used to track individuals too.”
The ramifications of Russia’s campaign to overthrow Ukrainian President Volodymyr Zelensky have been a subject of intense discussion in recent months. Japan, for instance, fears that Russian success in the war would offer China or North Korea a blueprint for how to invade a non-nuclear-armed neighbor while using nuclear weapons to deter U.S. intervention. Other analysts doubt whether the United States can equip Ukraine to fight the Russians without misallocating weapons systems needed in the Indo-Pacific.
The debate took on greater perceived urgency in August, when Chinese officials staged a blockade of Taiwan in response to House Speaker Nancy Pelosi’s visit to Taipei.
“I want to make clear to the Beijing authorities that armed confrontation is absolutely not an option for our two sides,” Taiwanese President Tsai Ing-wen said Monday during a Republic of China (Taiwan) National Day event. “Only by respecting the commitment of the Taiwanese people to our sovereignty, democracy, and freedom can there be a foundation for resuming constructive interaction across the Taiwan Strait.”
Fleming touted Ukraine’s resilience against the Russian invasion as a testament, in part, to the efficacy of Western “cyber technologies and advanced equipment.” But Beijing presents “the national security issue that will define our future,” he emphasized, in part due to China’s ability to compete in the technology sphere.
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“When it comes to technology, the politically motivated actions of the Chinese state is an increasingly urgent problem we have to acknowledge and address,” he said. “That’s because it’s changing the definition of national security into a much broader concept. Technology has become not just an area for opportunity, for competition and for collaboration — it’s become a battleground for control, values, and influence.”