The "siege" high platform has been built, let's see how DCEP "breaks the game"?
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The "siege" built by the environment
First, the aftermath of the world economic crisis in 2008 has not yet completely subsided, and at the beginning of 2020, it was hit by the new crown epidemic. In order to ensure the effective implementation of the anti-epidemic work in my country, a large area of the country has been "closed" and work and production have been suspended. The anti-epidemic work has achieved great results with the active cooperation of all parties. This is not easy for China, a developing country with a large population. In the first quarter of this year, my country's economy has experienced negative growth, and the order of production and life has also been greatly impacted.
In this year's government work report, it was mentioned that "under the impact of the global epidemic, the world economy has suffered a severe recession, the circulation of industrial chain supply chains has been blocked, international trade and investment have shrunk, and the commodity market has been turbulent. Domestic consumption, investment, and exports have declined, employment pressure Significantly increased, enterprises, especially private enterprises, small, medium and micro enterprises have become more difficult, risks in the financial and other fields have accumulated, and the contradiction between fiscal revenue and expenditure at the grassroots level has intensified." Therefore, when Premier Li delivered the government work report, he stated that this year's government work report is the first time for the whole country. There is no specific target for annual economic growth. Premier Li said: "We did not propose a specific target for the annual economic growth rate, mainly because the global epidemic and the economic and trade situation are highly uncertain, and my country's development is facing some unpredictable factors."
Because in fact, we understand that in addition to the relationship between the epidemic, there are also ongoing Sino-US trade frictions that are constantly escalating. Sino-US trade relations have been developing amidst frictions and twists and turns since the two countries established trade relations. In recent years, with the rapid development of Sino-US economic and trade relations, bilateral trade frictions have also shown an increasing trend. With China's continuous development and rise, as well as factors such as the recession of the US domestic economy, the US has gradually shifted from trade frictions such as textile special protection and anti-dumping against China to technology and checks and balances.
As early as 2003-2005, the United States launched a trade war. In 2018, the United States once again ignored China’s dissuasion and insisted on launching a trade war. The U.S. Department of Commerce announced that the U.S. government will prohibit ZTE from purchasing sensitive products from U.S. companies within the next seven years, and the ban will be lifted after ZTE pays a huge fine.
In 2019, the United States once again used the same trick against Huawei, but Huawei has since started to develop its own core technology and has continued to develop. In addition, under the pressure of the United States on the United Kingdom, Huawei's 5G construction has also been repeatedly suppressed. At the same time, the United States has joined forces with Mexico, Canada and other countries to participate in the Sino-US trade disputes, exerting multiple pressures on my country. Just recently, U.S. President Trump publicly stated that he would ban the operation of TikTok, the overseas version of Douyin, in the United States.
Neighboring India's attitude towards China has always been magical. In June of this year alone, India announced that it would ban 59 Chinese apps, including TIKTOK under ByteDance, WeChat, QQ, QQ Player, QQ Music, QQ Mailbox, QQ News under Tencent, Xiaomi Video, and UC Browser. , Baidu Maps, Weibo, etc. From the perspective of these banned or restricted applications, India is targeting apps developed by my country's well-developed Internet companies.
As for Huawei's 5G construction, the use of Xiaomi mobile phones has also been hindered and prohibited. Not only that, India also launched a series of measures to sanction China's trade earlier. The scope of these trade sanctions is very wide, including consumer electronics, rubber products, heavy machinery and other aspects. Recently, India has also introduced a series of regulations restricting China's development. It is reported that these rules will come into effect in March next year.
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Using DCEP to "break the situation" and "siege the city"
The International Finance News recently published an article "DCEP: The Future Accelerator of the "Inner Circulation" of the Economy". Cycle" has become a difficult problem for all countries. In this regard, the development of China's DCEP (China Central Bank Digital Currency) project is expected to provide the key to solving the problem from a new perspective. On the one hand, with DCEP as the fulcrum, the digital upgrade of monetary policy is expected to expand policy space, improve policy directness, and overcome the "liquidity trap", thereby improving the effectiveness of counter-cyclical regulation. On the other hand, DCEP helps to form an "electronic currency zone" for the RMB externally, and deepens the short-term areas of "internal circulation" internally, which will offset external policy interference and maintain policy independence and endogenousness.
In fact, how to put it, we know that the direction of economic development is related to two aspects, one is policy, and the other is market. Here we mention the two concepts of market economy and planned economy.
A market economy refers to an economic form in which social resources are allocated through the market. Simply put, a market is a place or point of contact where goods or services are exchanged. Markets can be tangible or intangible. Its characteristics are: ①marketization of resource allocation; ②clear definition of rights, responsibilities, and interests of economic actors; ③necessary and effective macro-control; ④internationalization of economic relations.
In a planned economy, the government generally puts forward the overall goals of national economic and social development according to the plan formulated in advance, formulates reasonable policies and measures, arranges major economic activities in a planned way, and guides and adjusts the direction of economic operation. It has the following characteristics: ①Under the principle of centralization and unification, it emphasizes the combination of the central and local initiatives; ②Plan management is the main focus, and at the same time, market management is emphasized; ③A variety of plan types are implemented in plan management; ④Focus on macro-control , comprehensive balance.
my country is a planned economy-led model, so the impact of policies on the market can be seen. Is it finally possible to have something to do with DCEP here? We know that DCEP is the legal digital currency in the research of the People's Bank of China. It is issued by the People's Bank of China, and the designated operating agency participates in the operation and exchange to the public. It is based on the generalized account system and supports the loose coupling function of bank accounts. It is compatible with banknotes and coins. Equivalent, controllable and anonymous payment tools with value characteristics and legal compensation.
We all know that DCEP is not a digitization of existing currencies, but a replacement for M0. It greatly reduces the dependence on accounts in the transaction process, which is conducive to the circulation and internationalization of RMB. The research and development process of my country's central bank's digital currency DCEP is in a leading position in the world. Coupled with the general trend of digital legal currency and my country's increasing international influence, if it can be well combined with my country's active opening-up policy, it will have a great impact on weakening the liquidity of the US dollar. The spillover impact of China's monetary policy will be very positive. With the spread of the global epidemic, globalization has stagnated or even retreated. DCEP may bypass the restrictions of other institutions or financial infrastructure construction and become a powerful tool to help the internationalization of the renminbi.
At the same time, DCEP can realize real-time collection of data such as currency creation, accounting, and flow, so its monetary policy is relatively more direct. One of the great significance of DC/EP operation is to make the collection of economic activity data more efficient and multi-dimensional. Monetary policy can be adjusted in a timely manner based on the real-time data generated by DC/EP to ensure that the policy is effective. At the same time, DC/EP data will also provide useful reference and necessary assistance for fiscal policy, currency release, and monetary policy formulation and implementation.
Because DCEP can enable the country and the central bank to have a more timely and comprehensive grasp of capital flows and market dynamics, so that the formulation of relevant policies can be more accurate and targeted, and its conduction is also important for the issuance and implementation of monetary policies. more accurate and effective. Not only that, DCEP also helps to prevent and resist external risks and accelerate the deepening of inclusive finance, which is also very beneficial to the realization of comprehensive and healthy economic development.
In addition, when the overall global environment is not improving, China has a large population base, relatively large consumption potential and consumption market, and it is relatively easier and more operable to tap domestic market demand than to expand external market demand. Moreover, the savings deposits of Chinese residents are also in the forefront of the world, so they have greater advantages than other countries in stimulating consumption, increasing domestic demand, and stimulating domestic economic growth. By issuing DCEP to reduce the impact of changes in the external environment on domestic policies and improve the directness of fiscal and monetary policies, it has the potential to "break the situation" and "siege" the promotion of national economic growth.
And just recently, according to relevant news, a number of people from major state-owned banks said that they are testing digital wallet applications on a large scale in Shenzhen and other places to prepare for the official launch of digital currency. The digital currency is led by the central bank, and various banks have been testing the landing scenarios in the past few months. At present, internal employees of some major banks have started to use it for scenarios such as transfer and payment.
In fact, to sum up, it is hoped that the RMB can be internationalized faster through DCEP, so as to increase the influence of the outside world on the implementation of domestic policies, and then more effectively achieve policy conduction, and then open up to the outside world by increasing domestic demand and the "Belt and Road" initiative. Policy cooperation to promote the formation of a good "internal circulation" ecology and the establishment of a good external environment. Although DCEP has not yet been issued, the higher the voice, it has also attracted widespread attention at home and abroad. Even so, the issuance of DCEP still needs to be piloted and continuously improved. After all, this move is quite critical and involves a lot. Therefore, even if the "siege" platform has been built, it is still necessary to wait patiently for the opportunity to "break the game", and DCEP may become the key opportunity to "break the game".
