The Chinese regime is using its new state-controlled digital currency as a Trojan horse against western democracies—and the free world needs to outlaw it, warned hedge fund manager Kyle Bass.
“I think that the digital RMB [renminbi] is the largest threat to the world as it exists today,” Bass said in an interview with The Epoch Times’ affiliate NTD on April 8. Bass is the founder and chief investment officer of Dallas-based Hayman Capital Management.
On Thursday, China’s hawkish state-run outlet Global Times proudly proclaimed that Beijing has taken the lead in the race between governments to roll out their own sovereign digital currency, given its work on “relevant standards and legal framework.” The article boasted that the digital yuan (also known as renminbi) will help challenge “U.S. dollar hegemony.”
China’s version of the digital currency is controlled by its central bank, the People’s Bank of China (PBOC), which began doing research into digital currency in 2014. In April last year, Beijing launched a pilot to test it in four cities. Most recently, on March 23, China’s state-run media reported that six state-owned banks in Shanghai began accepting people’s applications for digital-yuan wallets.
Two days later, Mu Changchun, the director-general of PBOC’s digital currency institute, made a proposal on global rules for central bank digital currency (CBDC) at a seminar held by the Switzerland-based Bank for International Settlements (BIS), according to Reuters. The BIS, dubbed the central bank of central banks, coordinates regulations in the financial sector.
Currently, PBOC is pushing to become the first central bank in the world to issue CBDC. The Chinese digital currency will be pegged to one yuan.
Bass said that the digital yuan poses a problem because of its built-in artificial intelligence technology.
“Imagine if you or I or anyone was forced to take digital RMB to trade or invest in China, which is probably one of China’s [future] moves, they’ll know where you spend your money, how much you have, [and] they will know all of your proclivities,” Bass said.
Moreover, if the Chinese Communist Party (CCP) learns that its digital-yuan users fail to toe the Party line on sensitive issues such as the Tiananmen Square Massacre, Uyghurs in China’s far-western Xinjiang region, Tibetans, and Falun Gong adherents, the communist regime could lower these people’s social credit score and take away their digital money, according to Bass.
The Chinese regime enforces a social credit system, which assigns each citizen a score of “social trustworthiness.” People can have points taken away from their social credit score by committing behaviors deemed undesirable by the CCP such as jaywalking. Those with low social credit scores are deemed “untrustworthy,” and thus deprived access to services and opportunities. They could be barred from traveling by plane or attending schools, among other things. Critics have slammed the system as a violation of human rights.
While the social credit system is currently limited in mainland China, Bass said Beijing could implement a global social credit system, and foreign investors using the digital yuan would also be at risk if they comment on issues that are taboo to the communist regime.
“If you think he [Chinese leader Xi Jinping] is a terrible ruler, all of sudden, your global social credit score gets whacked and the Chinese can actually stop your ability to spend the money [digital yuan],” Bass said.
“This is a way they can export their digital authoritarianism around the world. And it’s something that we must stop.”
Bass called on the West to make “a concerted effort” to outlaw the digital yuan since it has no place amongst western democracies.
“If you just take time to think about it, it is their Trojan horse of all Trojan horses,” Bass concluded.
China has in place an economic blueprint called China Standards 2035, through which it seeks to have China’s technical standards for advanced technologies chosen and exported to the international market. Doing so allows Beijing to become less dependent on foreign technology, while Chinese companies can earn royalties from licensing their patents.
Being aggressive in setting the international standards for digital currencies was one of the priorities outlined in China’s latest economic blueprint. The 5-year plan, unveiled in March, is a comprehensive blueprint laying out the regime’s social and economic goals for the next half-decade.