Chinese CBDC and it’s threat to nearby nations
The Chinese Central Bank Digital Currency has been a topic of discussion for a long time now, especially in the Western developed nations due to its potential influence on global finances.
However, many experts, politicians, and economists are forgetting the immediate surroundings of China. Countries like Vietnam, Thailand, Mongolia, and even India have much more to worry about when it comes to the Chinese CBDC.
Considering that most of the trade between these countries and China happens through land-based transportation, it’s completely possible that the usage of the CNY will be eradicated a bit more slowly. Also considering the fact that China wants the CBDC to spread as soon as possible, it’s likely for it to move to a sea-route trade, thus running many businesses out of the equation.
The susceptibility of developing nations
One of the main concerns, in this case, are the developing nations surrounding China, as well as developing nations in direct affiliation with China. These can be countries in Africa as well as several Eastern European countries.
For example, experts from Kapitali.ge, a financial website from the country of Georgia have noted that the local government is preparing for a substantial loan from the Chinese Communist Party.
We’ve already seen how China managed to gain a foothold in Africa, by lending billions of dollars to small African nations. They’ve lent so much that these nations don’t even have the capacity to pay it back. Therefore, they need to pay it back in another way besides money, and that’s political neutrality.
The next time the global community starts criticizing China, it will be expected to see several African representatives simply remain quiet or not participate in the discussions at all.
The potential clash
A clash with other dominant financial bodies in the world is imminent, however, it’s now China’s playing field simply because they were the first to introduce the idea, and will likely be the first to implement it.
The second in the race will most probably be the European Union, with the United States right behind them. However, the local allies that the US has, such as Taiwan, South Korea, and Japan, may pressure the US to speed up with its digital currency development as unifying the economies of these giants would be the perfect weapon against China.
Caught in the crossfire
It’s likely that countries like Vietnam, Thailand, Laos and even India will be caught in the crossfire of these economic behemoths and will be forced to make a choice on which digital currency to use.
It is very likely that choosing anything besides the Chinese CBDC could lead to sanctions that would destroy local economies. The only country that has the capability of remaining neutral in this situation is Australia, but it’s unlikely to be so because of the recent economic hardships due to the trade war.
