The economic powers have shifted throughout the past few decades. The United States no longer holds the sole superior position globally, not to mention once extremely influential nations like France and the United Kingdom. Rather, due to the rapid economic growth across Asia, the emerging markets are on the path to overtaking the United States. Notably and famously, the foremost example of such a shift in China, the superpower that managed to become the biggest export economy in the world.
It did not take just one night to make China into what we see today. However, the change was radical and extremely fast considering the scale of the transformation. The global influence of China soared along with its economic power, gradually becoming a true rival to the United States. Today, the two supernations are in a constant and a tight competition to becoming leaders of the world. In recent years, this competition took a rather unhealthy form as President Trump declared a trade war with China.
This process that has been ongoing over the past few years has impacted not only the two nations but also those strongly affiliated with the powerful economies. For instance, Australia, one of the world’s richest countries is practically dependent on China and the trade with the latter. On the other hand, Australia is a close ally to the United States with a more similar ideology and society. Under current circumstances, Australia has been put in an extremely tricky position between the major power poles.
Australia is just a single example of a country dominated by a superpower. There most certainly are aplenty that experience the significant influence of China or the United States, sometimes even both. Such influences are what make those nations truly the global hubs and power centers. Therefore, both of them are trying to extend their influence and cover even more nations.
China is the world’s largest export economy. Practically its entire wealth was created by manufacturing goods for overseas companies at a cheaper price and later exporting them. This system of manufacturing essentially everything from smart devices and toys to furniture is quite complex. Naturally, the trade operation of such a scale cannot happen without a well-streamlined network of logistical infrastructure. This is the prime reason why China launched and keeps heavily investing in its Belt and Road Initiative (BRI), previously known as One Belt One Road (OBOR).
The Belt and Road Initiative to Further Increase China’s Export Potential
In 2013, the Chinese government announced a new major project that was supposed to connect the country with every other part of the world. This is a major initiative, called the Belt and Road. The belt refers to the former Silk Road between Asia and Europe. This is a network of road transportation belting the entire world. On the other hand, road refers to the modern maritime network and sea transportation in general. The immediate coverage of the project is more than 70 countries and international organizations. It has been estimated that the project, which is the core of the communist party’s agenda and is inscribed in the constitution, requires an investment of $900 billion per year over the next decade. This number truly shows the scale of the project.
China’s Cryptocurrency and The Monetary War
Georgia is a small nation located on the crossroads of Europe and Asia. with access to the black sea, the country has become a subject of interest from the Chinese government. The national currency Lari (GEL) has been experiencing major turmoils over the past few years, leading to the skyrocketing rates of Forex operations in the small nation. Under such circumstances, Georgia needs foreign investments and has to remain a part of the Chinese initiative. But everything is not as easy. China is requiring Belt and Road initiative participants to use its cryptocurrency for operations.
For decades now, the United States has been using the US dollar to manipulate countries under its influence. The American currency is extremely strong and stable, benefiting from the trust of millions of people. On the other hand, the Chinese Yuan did not manage to achieve such a major success despite the rapid growth of the country’s economy. Therefore, along with the Road and Belt Initiative, China decided to launch a cryptocurrency that supports the megaproject whilst helping the government to bolster its influence over some nations.
Why a cryptocurrency? The answer could be rather complex and blurry. However, we know for sure that using the Chinese Yuan as a support mechanism for the project would simply not work due to its weakness. Even the Brawl at the Indian border earlier in June resulted in shifts in the exchange rate for Yuan.
On the other hand, cryptocurrency could serve as a new beginning. As of now, the Chinese government refuses to confirm or deny any of the countless allegations made against them and the digital Yuan. Yet, one thing is for sure – China will try to influence smaller states that fall under the Road and Belt Initiative with its cryptocurrency.
Now the experts fear that the Chinese cryptocurrency and politics could endanger many sovereign currencies in countries that fall under the Road and Belt Initiative Umbrella. Besides the Georgian currency which has become weaker amidst the regional uncertainty, other countries like Azerbaijan, Ukraine, Armenia, and a number of central Asian nations are to experience the same. With weakened economies, hence devalued currencies, China’s crypto innovation will easily manage to substitute financial instruments in those countries, potentially threatening the existence of some sovereign currencies.