China is one of the world’s largest economies and is home to more than 1.4 Billion people. These two factors make the Red Dragon a major market mover in traditional finance and the digital assets industry. Its stance on crypto is something market observers are monitoring closely.
China’s ban on crypto is usually followed by a big market dump. This is not surprising since it has the largest population in the world, with a net worth of $120 trillion. That is a big market base that could make or break any asset sector. Despite the country’s several crypto bans, it was still ranked 10 in crypto adoption according to the 2022 Geography of Cryptocurrency Report, a report by Chainalysis.
Lately, China seems to be reversing its hostile stance toward crypto, especially in how Hong Kong welcomes digital assets.
Let us check some of the latest news from this economic dragon.
Hong Kong Can Benefit from the Crypto Uncertainty in the US
Yat Sui, the co-founder of the blockchain and gaming company Animoca Brands, said in a Cointelegraph interview that Hong Kong could take the leadership position in Web3 development while US regulators drive away companies to seek better jurisdictions.
Yat Sui has also been invited to be part of the task force on promoting WEB3 development by the Hong Kong Special Administrative Region (HKSAR). As a person who believes in the crypto industry, Yat Sui is expected to lobby for more favorable regulations towards digital assets.
The view that Hong Kong has the potential to lead in Web3 and blockchain is supported by several factors, which include having clearer guidelines on virtual or digital assets, being in a strategic location, having a skilled workforce, and being an established business hub.
On the other hand, US regulators have been waging war against crypto companies. The Securities and Exchange Commission recently filed separate lawsuits against the two largest crypto exchanges, Binance and Coinbase.
The difference is clear as night and day, and Hong Kong looks like a better place to do business for the crypto industry. Companies will always try to survive, even if it means relocating to another country. And if the US does not reverse course, Yat Sui’s prediction might come true.
CBDC Now Accepted in the Chinese City of Jinan
Jinan, a city in China’s Shandong Province, is encouraging the adoption of the country’s CBDC by introducing the digital yuan as payment for bus fares. The city first tested the CBDC payment on a couple of bus lines, but it is now implemented in all the routes.
Card readers on buses are updated to accept the digital yuan. Those who choose to use the digital will receive up to six discounted rides in a month.
The People’s Bank of China (PBoC) said that the country’s central bank digital currency has surpassed $14 billion since its introduction. Even WeChat, China’s largest social media platform, has started accepting digital yuan for payment. The integration of the digital yuan with WeChat will allow users to pay listed merchants and to pay certain apps, including orders from McDonald’s and bills payment.
China to Restrict Exports of AI Chip Raw Materials
The US is currently considering limiting AI chips export to China as part of the US effort to curb China’s access to technologies that may support its military advancement and economic development. But China is not taking this lightly, as they threaten to limit the export of two important materials for AI chip making – gallium and germanium. China is the world’s top producer of both critical minerals.
These trade wars will affect a lot of industries, including AI and crypto. Both gallium and germanium are used for semiconductors, LEDS, solar cells, fiber optics, and transistors. A restriction for both will affect the supply chain for telecommunications technology, electric vehicles, semiconductors, and AI.
We have to remember that AI is now intertwined with some crypto projects, which include Fetch.ai (FET), Ocean Protocol (OCEAN), and The Graph (GRT).
Keep an Eye on China’s Stance on Crypto and Other Sectors
China is a key player in the AI and crypto space, and its actions and policies can have significant impacts on the global market and innovation. As an economic powerhouse with a large population and abundant resources, China has the potential to shape the future of these technologies, as well as challenge the dominance of the US and other countries. Not paying attention will be disastrous.
