Impact of Emerging Technology on the Economy of China

Impact of Emerging Technology on the Economy of China
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Impact of Emerging Technology on the Economy of China
Introduction
A new trend emerged in China with Xi’s presidential term when the country began to embrace tech policies, placing them at the forefront and integrating such policies with its economic model. (Ehrlich, 2020) During this time, China began to realize the importance of “information consumption” in driving the country away from an economic model based on imports and exports into a technologically-driven model. With this new model, there was an expansion in Internet connectivity, smartphones, mobile payments, and online-user traffic that has seen the development of today’s powerful data infrastructure in the country. Built-up emerging technologies including artificial intelligence (AI), cloud computing, blockchain, and other advanced technologies, China’s future digital economy is promising with data from the initial mobile Internet economy serving as the engine for growth. However, while there have been cutting-edge research in AI and cloud computing to support the country’s ambitions, China’s political system is centralized and is still dependent on foreign technologies that are now under threat with the existing poor trade relationship with other countries such as the United States. This paper examines the impact of blockchain on the economy of China, the challenges of its adoption, and possible solutions that could be employed in supporting the country to realize its growth goals.
Definition of the Problem
The political system in China that is largely centralized coupled with its cutting ties with foreign countries such as the United States will negatively impact its ambitions of adopting and reaping from emerging technologies such as blockchain and other digital technologies. Financial technology or Fintech is largely powered by blockchain, the core technology that supports decentralization and has developed to interact with traditional systems of confirming and executing transactions (Ducas & Wilner, 2017). For China to benefit from blockchain technology, the country must experiment with its local policies while limiting opportunistic centralization initiatives. China became the first country in the world to ban cryptocurrencies although there have been remarkable efforts to explore different avenues of decentralization in the region. Besides centralization policies, the country is increasingly cutting ties with other players in blockchain technology such as the United States. Although extensive research efforts in blockchain have been invested, the country still depends on the United States for the supply of semiconductors and other related patents that the U.S provided. With the existing tension between the two countries, efforts to transform into a fully tech-driven economy may be faced with challenges. In particular, Fintech companies in China may be forced to pay a high price in acquiring U.S. tech products.
Solution
China is ambitious in developing a central bank digital currency (CBDC) to avoid disintermediation from the commercial banks and will be perhaps one of the countries in the world to release its own...