Why the Chinese government is the least likely government in the world to suppress Bitcoin

Among the potential risks of Bitcoin, policy risk has always been one of the most frequently mentioned risks.

Due to the decentralized nature of Bitcoin and the fact that many of its supporters claim to be liberal, Bitcoin has always been regarded as the opposite of government fiat currency, and it seems that it should naturally become a thorn in the eyes of the government. In particular, a notice on preventing Bitcoin risks issued by the central bank and five other ministries at the end of 2013 caused the price of Bitcoin to plummet by more than 50%, and was used by many people as an example of evidence that Bitcoin is at risk of being suppressed by policies. However, the development of things did not go in the direction of the script that everyone imagined. Although technically Bitcoin is as difficult to be completely "banned" as pornographic websites, after waiting for a long time, apart from issuing a document, there was no effort made by the Chinese government to suppress Bitcoin. This matter is also quite strange from the perspective of ordinary people. Therefore, exchanges are still open, mines are still dug, and even CCTV will promote Bitcoin on the financial channel every now and then.

It seems that there must be something fishy that something claiming to subvert legal currency is so condoned in a country with such strict foreign exchange controls!

For a while, I was also very puzzled, and I was also worried that one day the risk would suddenly erupt, and the Chinese government would suddenly announce a comprehensive ban on Bitcoin. However, one day, I suddenly figured out why the Chinese government is so friendly to Bitcoin. In fact, the Chinese government is the government in the world that should least suppress Bitcoin!

Why do you say that?

As we all know, China is a country with strict foreign exchange controls, and the RMB is currently facing considerable depreciation pressure. Ordinary people only have a foreign exchange quota of US$50,000 per year, forcing many people to think of other ways to exchange RMB into US dollars. Among them, Bitcoin is a very good way to exchange foreign exchange. Now many people think of Bitcoin first when they mention large-scale foreign exchange. At first glance, this is indeed a loophole in foreign exchange control that needs to be plugged. But if you think carefully about the purpose of the central bank's foreign exchange control, it is not actually to prevent you from exchanging US dollars, but to prevent you from exchanging US dollars with it and consuming its foreign exchange reserves!

As long as you can think of a way to make the Americans willingly pay you US dollars, they might be happy to see it happen. For example, suppose I just sold a house in downtown Shanghai and have 10,000,000 RMB (so many zeros~) and want to buy a villa in California, USA, but the exchange quota of only 50,000 US dollars is obviously not enough, what should I do? Suppose at this time I don’t know about Bitcoin. There is no way. I grit my teeth and stamp my feet. I can directly invest this 10 million RMB in China to build a factory to produce goods that Americans need and sell them to Americans in exchange for the US dollars I need. I believe that the government will not only not restrict this kind of "mass entrepreneurship" behavior, but will also strongly encourage it (in this day and age, if you have money, you don’t speculate in real estate but invest in industry. What a good Lei Feng comrade~).

Okay, next I have to study what products to produce and sell to foreigners. Well, drones seem to be very popular and foreigners like to play with them, but the threshold of this thing is too high to handle, and the market is basically monopolized by DJI. After further research, I suddenly found that there is a virtual product called Bitcoin that foreigners like to buy now. The price is not cheap, and it is very convenient to export. There is no need for packaging, freight, logistics, and a lot of troubles. Just tap a few keyboards and it can be shipped to the other side of the ocean immediately. How worry-free! How to produce? Just buy some mining machines, match a few computers, find an old warehouse and build a mining farm to produce. The threshold is not high. Oh my god, what a good investment! Hurry up and get started! After tossing for a while, I found that it was not right. The mining business has long become a red ocean in China because of the low threshold. After working hard to build a mining farm, I found that the output is not even enough to cover the electricity cost! Forget it, I'd better go to the exchange to buy and sell it to foreigners...

I have written so much just to explain that whether it is mining for dollars or buying coins directly for dollars, these foreign exchange transactions through Bitcoin are fundamentally different from the foreign exchange transactions restricted by the central bank that lead to capital outflows . In fact, making mining machines to mine Bitcoin is the same as making drones to sell to foreigners. They are both a form of export and foreign exchange earning behavior, which is currently strongly advocated by the country.

Moreover, mining machines are the most competitive and mid-to-low-end electronic manufacturing industry in China, which is why China has been able to monopolize the production of Bitcoin across the world. For a country like ours that lacks natural resources, we should not suppress Bitcoin, a resource that fully fits our country's unique endowment, but should vigorously promote it and actively lead the formulation of the rules of the game.

Just as the South African government will not suppress the gold industry and the Saudi government will not be stupid enough to suppress the oil industry, the Chinese government has no reason to suppress the Bitcoin industry!