(Bloomberg) — China is learning the lessons of Russia’s war in Ukraine and could use its centralized digital currency to avoid future sanctions, UK spy chief Jeremy Fleming will warn.
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Fleming, the director of the intelligence, cyber and security agency GCHQ, will use a speech in London on Tuesday to argue the Chinese Communist Party leadership is using its “financial and scientific muscle” to manipulate strategically important technologies as a means to control companies and ordinary people. He will single out China’s currency as an example of that type of coercive behavior.
The digital currency “introduces efficiencies and new ways of settling payments, but the way it’s being implemented allows the monitoring of citizen and forces companies to use the service,” Fleming will say. “It might, in future, also enable China to partially evade the sorts of international sanctions currently being applied to Putin’s regime in Russia.”
China is a front-runner in the global race to launch central bank digital currencies and is testing a digital yuan, or e-CNY, in major cities including Beijing and Shanghai. Its operator, the People’s Bank of China argues that it “attaches great importance to protecting personal information and privacy.”
PBOC Official Vows to Protect User Privacy in Digital Yuan Push
The e-CNY is still in its early stages, and the yuan itself still pales in comparison with the dollar, making up 4% of the global currency market compared to 88% for its US counterpart, according to the most recent data from the Bank for International Settlements.
Taiwan
While he didn’t make an explicit link in his pre-briefed remarks, Fleming’s comments suggest that China might at some point in the future be able to circumvent at least in part any sanctions resulting from a potential attack of Taiwan. Russia’s war in Ukraine has prompted the US to step up contingency planning for a possible Chinese assault on the island. China denies any plan for an invasion.
“Be in no doubt, the Chinese Communist Party is learning the lessons from that conflict,” Fleming will say. In a section of his speech discussing the Taiwanese semi-conductor industry, he’ll say that events in the Taiwan Straits “have the potential to directly impact the resilience of the UK and global future growth.”
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