China has been developing its Digital Currency Electronic Payment (DCEP), in other words, the digital yuan, for several years. The country is currently conducting massive domestic trials, and plans to offer the currency to guests during the 2022 Winter Olympics. Simultaneously, the Chinese government is carrying out a massive advertising campaign, which, however, cannot convince Western critics.
Among other issues, particular concerns arise around possible restrictions on individual liberties – words that have sounded next to the name of China way too often. While the country’s government vows not to track small private transactions, critics are convinced otherwise, Bloomberg writes, citing the Center for a New American Security. According to the organization, e-renminbi “represents a significant risk to the long-held standards of financial privacy upheld in free societies.”
It’s not just idle chatter: Chinese citizens’ actions in the field of bank loans and online commerce have been monitored for already several years. In this case, the functions of Big Brother are performed not by the state, but by private companies, and, first of all, by the world’s largest trading platform Alibaba. Particularly, Alibaba’s Sesame Credit rating system has been awarding points to users based on their consumer behavior for a number of years.
The number of points affects everything, from credit history to hotel reservations and promotion of personal pages on dating sites. In addition, based on the study of user data, Sesame takes into account what a person does on the Web, and takes guidance from this information.
All of this raises questions about implications of State access to private finance and sheds some light on people management performed by the State. A low credit rating not only reduces the chances of getting a loan, but also has a direct impact on the user’s life: once you have a lower score, you are down the pecking order. Speaking of Western countries, a number of other problems are added to this: already now, US banks admit that some people are being unfairly shut out of the system. It is not a pleasant though to think of what could happen if such errors were combined with the Chinese system: the mere fact of belonging to a ‘wrong’ racial group or expressing ‘unfit’ views may bar you not only from stable finances, but from living your life at its fullest. The world seems to start leaving this stage; would it be wise to fall back into the trap?
Returning to the digital yuan, now Chinese people have an illusory choice: not to use Alibaba, and, consequently, Sesame. But will they still have this option with the introduction of the e-renminbi?
“The digital yuan is both programmable and trackable giving the Chinese government enormous control over the economy. Not only will Chinese policymakers know every consumer choice made in the economy, but they could also directly affect spending behavior by making the currency expirable by a certain date,” says Boris Schlossberg, managing director of FX Strategy for BK Asset Management.
As top Chinese services and Western companies such as Starbucks or McDonald’s are joining the system, this prospect becomes more real. Such an invasion is dangerous from the point of view of the relationship between citizens and the State. Digital currency is the next link in the system of global control of information flows, combining personal data into single databases, creating the social rating and obstacles to regulation in the field of personal data. In turn, all this is only part of the actions taken by ruling regimes to tighten control over the autonomy of citizens: that is, over their ability to think critically and act independently, not under the influence of skillful manipulation.
Again, this is not an assumption, but a reality that has been unfolding for several years: it is enough to just a look at Hong Kong, where protesters are afraid to use their Octopus multi-purpose payment cards, and the government is forcing banks to freeze tranches. This happens not only in China: last year those who suffered in Belarusian protests woke up to find their bank accounts frozen. This action took the Belarusian authorities several days, but how much easier would it be if the key to the bank accounts was in the direct access of the government? And is it really possible to talk about freedom of speech and human rights if the state has direct control over private finances and can deprive those unwanted of their livelihoods at any time?
Central means of payment “would enable the state to monitor every single detail of their citizen’s economic decisions, suppressing the last place where private business can be conducted,” notes Cashless Economy web portal. Now China is facing a choice: to provide the state with a tool to carry out such actions, or to insist on personal freedom and the fundamental right to privacy of personal life, and so do other countries across the globe. While global democracies claim that the human rights are the cornerstones of their state systems, they already have the same instruments of people management as those in China. Their systems may be not fully functioning yet, but this is just now. It is quite possible that in the near future, when technologies become more advanced and data collection becomes ubiquitous, any watchdog may try to turn the surveillance system into a system of control and suppression. At this point, it is just a matter of time and political will.