The Threat of Ignoring the eCNY

Last week the normally equidistant Diplomat has abandoned its principles by publishing what appears to be naked Chinese propaganda, in the form of a contribution from Dr. Sara Hsu, Visiting Scholar at the Fudan University. (https://bit.ly/SarahHsu)

The article title says it all: “Reality Check: China’s-Digital Yuan Is Not a Threat To the West”. Straight from the bat Dr. Hsu assures us that “China is not trying to get its claws into Westerners.” No! “The perceived stark division between people in China and the West is not reality”- she goes on. Surely we can do business together she chirps away, undeterred by the three-pronged July 6th assessment of General Secretary Xi that:

• “the East is rising and the West is declining,”
• "the biggest source of chaos in the present-day world is the United States,”
• “the United States is the biggest threat to our country’s development and security.”

Once done with dismissing General Secretary Xi’s ominous pronouncements, Dr. Hsu moves on to lecturing us that the eCNY is not a form of exporting “digital authoritarianism.” And how does she know that? Actually she doesn’t, as she herself states: “It is (more) likely that the Chinese digital currency will have to be exchanged across borders, which means that the Chinese government is unlikely to track the currency throughout the globe.”

But “unlikely” doesn’t cut it, does it? Especially as China has quite a long story of engaging in very unlikely behavior.

Most interesting, Dr. Hsu's eCNY analysis blissfully ignores the far more ominous threat the eCNY poses to American interests: subverting the US dollar reserve-currency status. One can write volumes on the issue, and I am not going to analyze whether the US dollar should remain a reserve currency, of whether its status is fair to other nations or not, and so on.

But I really wonder how can “export of digital authoritarianism” be a matter of discussion at all, while the far worse “reserve - currency impact" doesn't even get a mention. Sounds like: “ in an airplane crash your luggage may fall out of the overhead compartment.”

Never afraid to swing decisively, Dr. Hsu once for all labels the eCNY a minor issue altogether. Not a threat. We should, nay, must ignore it entirely, since we have bigger fish to fry: cyber-conflict, the “technology issue” and the trade war. There is some obvious merit in her argumentation. However the “technology issue” is not, as you might have hoped, an engagement to dissuade China’s long-standing and grotesque misappropriation of U.S. intellectual property. Instead, the “technology issue” consists of the U.S. "fixing" the embargo it has imposed on dealings with Chinese companies part of China’s military complex!

Dr. Hsu’s spells it out: “U.S. should develop better data privacy regulations and work with the technology business community to understand how to maintain American firms’ profitability while ensuring national security and IP protection.” This is very one-sided. It's not the thief who must stop stealing watches; but rather the victim who should leave her Rolex at home.

I am very surprised the Diplomat has associated itself to Dr. Hsu’s clumsy pro-China propaganda, one which – while music to some in the business community - so aggressively insults common sense and belittles our national interest.