Can China’s CBDC Replace The Dollar?

As the United States and China continue to develop a more hostile relationship since both countries are trying to out-compete against one another on the global stage. The United States is the current superpower, and China is the upcoming (emergent) superpower. Both countries can spend a lot of money to improve their military strength in terms of troops, hardware, and technology. Both countries are worrying that the opponent would do so well in terms of global trade, influence, and everything else that it would outstrip the home country’s advantage on the global scale! Imagine that one day China could be so influential that it would prevent most countries around the world speak up and side with the United States to prevent China from invading Taiwan out of fear that China would stop trading and even worse will start a military campaign against the outspoken country in a near future. In reverse, China wouldn’t want the United States to continue to dominate the globe since China is now stronger and would become a huge boulder that could block the United States’ global domination.

We all know that the United States Dollar is the dominant reserve currency in which even China itself is holding a large number of dollars just to allow home companies and home local governments to transact with countries that are only wanting to trade in dollars on a global scale. As the United States is getting more hostile toward China for obvious reasons such as wanting to prevent China from dominating the world with its technical standards and influence and whatever else, China knows that it could not rely on the United States’ goodwill in the long run. As the United States sanctions Iran and North Korea and few other countries from conducting dollars on the global scale, China knows that it could be sanctioned by the United States if both countries are going to get even more hostile toward each other shortly. This is why China has been creating a different global transactional path known as CIPS which allows China to conduct trades on a global stage without relying on the SWIFT system in which the Dollar is dominated.

Instead of just being satisfied with what CIPS has to offer for China in terms of conducting trades with countries that are friendly to China on the global stage such as Iran, China is taking one step further by pushing for CBDC (Central Bank Digital Currency). As we speak, it’s estimated that roughly 83% of the world’s central banks are looking at creating their own CBDC version. China’s CBDC is the only digital currency in which has already being pushed to use by its citizens, and this means China’s CBDC has progressed the most out of all CBDC projects out there in the world. As we speak, Canada, Sweden, and few other countries are further along but behind China in terms of making progress in creating a CBDC system. The United States is unfortunately way behind many other countries in creating its CBDC system.

As China makes progress in creating and promoting and updating its CBDC system, the unintentional or intentional, depending on who you’re asking the question, advantage that comes with the creation of this CBDC system is that many countries who are signed up to be a member of BRI (Belt and Road Initiative) may adopt China’s CBDC sooner than we could have imagined for trades on the global stage. How come? Perhaps, using China’s CBDC for conducting trades could cut down the costs of transactional fees, and the digitalization of the logistic application such as clearing customs and so on could be done on the blockchain (which underpins China’s CBDC) smoothly. For example, country A bought huge containers of China’s export for its own import need could just open up an app and with a few clicks here and there — the logistical digitalization through the usage of CBDC — and can order many huge containers of products to be imported without needing to file paper works online or offline for clearing customs and paying huge currency conversion fee and whatnot — meanwhile, the app would show when and where the products have been moved and when will the product arrive on the doorstep of country A.

After watching the video right after the break, you might as well be as educated on the topic of digital currency as I am since the information I’ve shared in the post was learned from the video itself. I have no affiliation with the people in the video right after the break, and I’m sharing the video since it got so much important information about our future. For example, the speakers in the video mention that through Alipay and Wechat, Chinese people become cashless society but China’s CBDC won’t replace Alipay and Wechat but rely on these two platforms to get popular. Another example is that the speakers mention how the digitalization of currency could do away with overdraft protection fees in which the poor are most likely being affected — as we speak 30 billion dollars of overdraft protection fees could have been conducted annually if my understanding of what the speakers have conveyed is correct.

In summary, I think China’s CBDC may displace the dollars on the global stage but won’t replace the dollars on the global stage. To the best of my understanding from watching the video, I could understand that China’s CBDC will allow countries to use CBDC to cut costs and time in conducting trades with China on the global stage. Since China has been pushing for closer ties with BRI members, I could see BRI members will rather use China’s CBDC over the dollars in the longer term. This means China’s CBDC will displace the dollars on global trade but the Dollar will still be a reserve currency for some countries that want to do trade in dollars on the global stage. The dollar won’t go away but the Dollar may lose influence to China’s CBDC over a longer period. This is why the United States too may have to push hard on creating its CBDC system to compete against China’s more progressive and developed CBDC system as we speak. If the United States doesn’t do so, I fear the United States will be way behind in competing against China in terms of trades and currency influence on the global stage.

What Will Happen After COVID-19 Pandemic Goes Away?

Although COVID-19 is still running rampant in the West, especially in the United States, I think when the dust is settling, everything will be amazing again. Why am I so positive like this even though we don’t even yet have a mass vaccination for the COVID-19 pandemic? Just let’s say I believe in the effects of human nature, and certain effects of human nature will never change even if the world is going to end tomorrow!

Right now, people are not going to movie theaters, eating out, shopping at luxurious malls, and whatnot, but believe me I think when COVID-19 is over — you can believe that people will do all of that and even more than they have had ever done in their entire life! I think the feelings of being pampered and served are so amazing that people want to feel something like that again! After all, they are being cooped up indoors for so long during the pandemic — once COVID-19 is gone — isn’t it obvious that there will be a revenge of massive consumerism on the service sector?

Currently, malls and other public physical consumerism/service spaces are not being favored by everyone for obvious reasons — DUH! — not getting infected by COVID-19… So, let me tell you why am I being Mr. Obvious(!) — well, let’s say it’s common sense folks! Let me ask you this, do you want to go out and having a fun dinner with your best friends in various delicious restaurants that you used to go out before COVID-19? I would! So, for me being optimistic about how things would return to normal or things would turn out to be even better than how things were before the whole COVID-19 thing is rather Mr. Obvious(!)…

One small problem though! I think my prediction could be a little off from the bulls-eye because of the negative effects of the COVID-19 aftermath. Although we’re not out of the wood yet and I still could imagine that the people — who are losing jobs due to the massive shutdown of various restaurants and other service businesses — may not be able to get back into the same job career that they had enjoyed before the COVID-19 pandemic. Companies that are being badly affected by COVID-19 may not be able to survive even if COVID-19 is going away. Many retail stores may have to file for bankruptcy! Survivable companies may have to employ more robots and automation to recuperate the costs that they lost during the COVID-19 pandemic, thus these companies may hire fewer human employees.

The negative effects of the COVID-19 aftermath could be so huge that it could push down the market prices for unfavorable real estate areas. For example, several real estate areas could see people walk away from their mortgage payments since they could not afford the mortgage payments any longer for not having to be able to find a new job. When the real estate sector turns negative — depending on how bad it could become — it could also affect the businesses in such neighborhoods. Local businesses could see a huge loss in revenues. It’s like a chain of effects or chain of reactions, and the negativities could multiply throughout the economy.

Nonetheless, I feel that the economy is a strange beast because it could contain both the negatives and the positives all at the same time. I could see a scenario of people will go hungry and yet some people go out and spend money like crazy to make up for the time that they were forced to be indoor for so long during the COVID-19 pandemic. Perhaps, we could see the unbalance of the income quality thus we could have huge inequality in income after the COVID-19 is going away. Some people will be able to do more and enjoy their life more during the COVID-19 aftermath, and other people will have to go hungry and become homeless. I just pray that everyone would be able to do better and feel better after this horrendous COVID-19 pandemic — but we all know praying might not be enough. Let’s hope I could be so wrong, and everything will be super-duper after the COVID-19 goes away.

Can the United States Invasion of Iraq in 2003 Be A Good Model for China’s Possible Invasion of Taiwan?

I’m no strategic kind of person since I’m rather a straightforward chap. Nonetheless, I do have my own opinions in the matter of whatever could be happening in the next decades or so. I don’t think I’m prophetic, but I guess if you keep guessing, something ought to turn out just like the way you’ve had imagined. Thus, if the experts are correct on how China would want to invade Taiwan soon, then I think China will do it in a similar fashion to how the United States had done Iraq in 2003. A complete overwhelming show of force.

By showing an overwhelmed show of force in Iraq, the United States has made China eagerly to update and upgrade its military structure, tech strategy, and weapon knowhows. China would not want to be the next Iraq. So, it is logical for China to think like the United States if China has to invade Taiwan. I think China will try to overwhelm Taiwan in an invasion of Taiwan to the point that, perhaps, could shame the one that the United States had done in Iraq in 2003. Why? By overwhelming an enemy force rather easily, China sends a message to unfriendly countries that it’s not to be trifled with.

I think the invasion of Iraq by the United States and the fall of Saddam Hussein had pushed China to be even more cautious and paranoid of the United States. This event may have had pushed China into going all out in upgrading its military and related capabilities. Furthermore, China is now eager to advance in other tech industry sectors such as quantum computer/satellite and space techs. This way, China could use these advances during peacetime for economic purposes — but the dual usage of these capabilities will be a tremendous, helpful kind of force in wartime for China.

An Honest Opinion: Can the West Decouple from China?

I have a feeling that even though the West is trying to decouple from China, with job loss increases during an ongoing pandemic, I don’t see how a country like the United States can bring jobs home since unemployment is going to be high still. By this, I feel that with more people are relying on the government to create jobs and whatnot, bring jobs home mean companies in the United States have to hire more and spend more to produce anything. Meanwhile, China is once again increasing the output of their manufacturing, albeit that wages are increasing in China, the living costs in China are still way cheaper than the West, and so I think their wages won’t be rising to a point that foreign companies want to shift their manufacturing bases away from China faster. After all, producing in China does save on the costs of shipping and exporting.

Producing at home means that local companies have to be able to produce things cheaper than their foreign imports. Usually, import stuff should be more expensive than locally made since there are import costs and shipping costs that would add on to the top of the costs of the goods that are being made elsewhere. Unfortunately, it’s also depending on how productive a local manufacturing base is and other variables such as how cheap are the local wages and whatnot. Furthermore, we also have to worry about how is the local economy is doing. To add salt to the already infected wound, the COVID 19 pandemic is still an ongoing thing. So, I don’t see how decoupling from China is easy at all.

When we are trying to decouple from China, we should be prepared for China’s backlash such as how China would ramp up their distaste for foreign products even though most of these products are being produced in China. For an instance, China could ramp up the investigation into foreign companies that are actively opened for business in China, and by doing this China could persuade its people to trust less on foreign imports. By doing this China could also support their local economy through local made, and so in the long run China would be less exposed to foreign imports. I also see that China is producing much more stuff for foreign countries than foreign countries produce stuff for them — in a way why would China import more stuff when they could make everything at home?

As the United States tries to ramp up the pace of decoupling with China, China could see itself ramp up the pace of relying less on foreign imports. Meanwhile, China could also make it a lot harder for foreign companies to operate in China. At home, Western companies are facing the uglier local economy, and so these companies may not be able to produce higher revenues from local markets. Now, through geopolitical conflicts between China and the United States, it would make a lot harder for Western companies to make profits in China. Of course, Asia is a big place, and so Western companies should be able to ramp up their marketing elsewhere! The question is can other places replace the loss of the Chinese market?

Avocado Farming Increases Water Shortage In Some Parts of The World

I sometimes do add Avocado to my salad. I rarely eat Avocado by itself though. Before I watched the video which I’d shared right after the break, I didn’t know that Avocado is a danger to water resource for some places around the world. In Chile, some parts suffer water shortage, and Avocado farming increases the water shortage for people who are living in these water shortage regions. The video claims that Avocado is a thirsty fruit since it requires eight more times of the water than potato. I never knew that Avocado is so thirsty. Now, I feel guilty whenever I throw away Avocados that had gone bad in the refrigerator. Check the video out right after the break.

Should Africa Rely On Automation To Leapfrog Cheap Labor Phase?

Africa got 1 billion plus people and yet the whole continent’s economy is only about the size of South Korea. This means the whole African continent is still very poor and needs to be developed a lot so the Africans can have some hope for a better future. Unfortunately, as cheap labor is moving out of China to China’s neighbors such as Vietnam, the whole world is now all the rage on how to rely on the automation of machines so even cheap labor cannot compete. If this is the case, I don’t think the Africans will have a chance of mobilizing their 1 billion plus people to industrialize the African continent.

So, the question is if Africans cannot rely on cheap labor to develop and industrialize the African continent, then what else could the Africans rely on to develop Africa? If Africans tries to rely on the aids of the Western countries, then Africans will never be able to develop their own industries that are necessary to pull the African continent out of poverty for good. Although the Chinese are building the infrastructures inside Africa to better the livelihood of the Africans, without a staple of strong industries the Africans will still face the problem of not being able to industrialize the African continent.

Although I don’t know much about Africa, in my humble opinion, Africans should try to go for automation themselves to leapfrog the cheap labor phase. This means Africans have to develop a very entrepreneurship mentality so they can come up with business models that need automation as a necessary ingredient for their business. Furthermore, instead of only relying on aids from the West and the infrastructures from China, Africans should demand the Chinese to teach them how to develop and incorporate Artificial Intelligence in their businesses. I think the machine learning and higher AI will definitely be able to help the Africans to automate the needs in their entrepreneurship businesses and leapfrog the cheap labor phase.