The US Senate vs. PBOC: Why Digital Yuan Caused Tension During the 2020 Olympics

Chinese authorities claim cryptocurrencies have turned into conduits for illegal financial activities. Given the Chinese government’s propensity for controlling and monitoring its citizenry, it is not far-fetched to imagine that its real problem with cryptocurrency is the anonymity it offers users.

In a bid to get a head start in the sphere of central bank digital currencies, the People’s Bank of China (PBOC) began plans to develop the digital yuan in 2014.

Red Envelope Campaign

After about eight years of development, PBOC began large-scale trials of the digital yuan across China in 2021. The tests occurred in the cities of Shenzhen, Chengdu, Suzhou, Shanghai, and Xiongan. The PBOC dubbed the trials the red envelope campaign.

According to a recently published white paper by PBOC on the digital yuan, interested parties opened over 20.87 million personal wallets and over 3.5 million corporate wallets across the five cities.

The paper also states that people transacted $5.39 billion worth of digital yuan. After the success of the first phase, PBOC aims for further trials of the digital currency during the 2022 Beijing Winter Olympics.

PBOC intends to allow foreign visitors and athletes to use digital yuan for retail transactions.

Enter American Senators

PBOC’s intention caused great anxiety amongst conservative American lawmakers. It also allowed several of them to peddle the GOP’s anti-Chinese agenda further. China-bashing is a strategy that the red half of American politics embraced quite a lot in recent times.

When the 2020 Tokyo Olympics started, three US senators wrote a letter to the United States Olympic Paralympic Committee (USOPC). The letter urged USOPC to bar American athletes from receiving or using the digital yuan.

Marsha Blackburn of Tennessee, Cynthia Lummis of Wyoming, and Roger Wicker of Mississippi expressed concerns that a digital yuan is a spying tool.

Marsha Blackburn

Tennessee senator Marsha Blackburn has been the loudest anti-Chinese voice in the post-Donald Trump GOP.

She recently co-signed a letter with Senators Roger Marshall of Kansas, Tom Cotton of Arkansas, and Ted Cruz of Texas. The letter, addressed to President Joe Biden, voiced concerns about American cyber security in the face of heightened Chinese aggression.

This came after a report that Chinese-based hackers, with the backing of the Chinese government, had exploited a bug in Microsoft’s email servers to spy on American organizations.

Senator Blackburn also co-sponsored another bill in May last year. The bill denies visas to graduate students looking to study STEM courses in the US from China.

Conspiracy Theories

Several conspiracy theories about the digital yuan have made rounds on social media. On Reddit, users discussed how China embedded the digital yuan with spyware and malware for surveillance and censorship.

The senators also likened the digital yuan to the popular Chinese social media app, WeChat. Reports claim China’s government uses the app to monitor the chats of all its users.

This letter by Blackburn, Lummis, and Wicker comes hot on the heels of another conspiracy-peddling missive written to President Joe Biden by Arkansas senator Tom Cotton.

In his letter, Senator Cotton raised concerns about China trying to collect the DNA of American athletes. He said the country plans to use the DNA in the building of super soldiers.

The Republican senators’ obsession with China, inclusive of unverified suspicions, is nothing new. Conspiracy theories underplay the conservative wing of American politics. American politics are now derisively referred to as theQGPin certain circles.

The QGP moniker is a snide play on the name of the infamous far-right conspiracy group, QAnon.QAnon’s conspiracy theories have often resonated with the Republican base.

The Fear of the Digital Yuan Goes Beyond Spying

The American senators’ resentment against the digital yuan might indeed stem from privacy and security concerns. Yet, there’s a growing suspicion that it’s more than the Chinese government spying on American athletes.

The fear of losing America’s long-held dominance over the global financial system could likely fuel the lawmakers’ anti-Chinese paranoia.

Under President Donald Trump, the United States embraced an “America First” ideology centered on protectionism. Post-Donald Trump, China probably sees an opportunity to seize the mantle of global leadership.

A head start in developing a central bank digital currency provides the Chinese with a tool to further advance its geopolitical interests while eroding the dollar’s hegemony in international trade.

The United States can only blame itself for having dithered over developing a digital currency of its own.

Is Boycotting the 2022 Beijing Winter Olympics Justifiable?

The issues of the digital yuan are part of a long list of accusations that US lawmakers have leveled against China. It is no surprise that among them are human rights violations in Xinjiang.

The United States Senate passed a bill introducing measures to tackle China’s growing economic influence. It also somewhat confirmed a diplomatic boycott of the 2022 Beijing Winter Olympics. Such events air the growing animosity between China and the US.

Whether the letter by Senators Blackburn, Lummis, and Wicker on the digital yuan will sway the USOPC remains a question.

The USOPC opposed the calls to boycott the Beijing winter games. The entity cited the ineffectiveness of a similar US-led boycott of the 1980 Moscow Olympics.

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