INSIGHT: US Must Act to Slow China’s Roll Toward Global Digital Payments Domination – Bloomberg Law

INSIGHT: US Must Act to Slow China’s Roll Toward Global Digital Payments Domination – Bloomberg Law

After years of neglect, the U.S. government has woken up to the strategic challenge posed by China. It is no secret that China seeks to dominate global markets in manufactured products, advanced technology, and artificial intelligence.

Global concern about Chinese hegemony over 5G networks is at an all-time high. Human rights and national security flashpoints are severely testing China’s relations with the West.

Less known and perhaps more worrying, however, is China’s ambition and growing ability to control the next generation in international financial payments through blockchain technology and digital or cryptocurrency. If successful, China will become the gatekeeper for key payment technologies and systems that the U.S. government, companies, and consumers will increasingly rely upon in the future.

Over the past three years, the Trump administration has made significant economic headway with China, extracting meaningful trade concessions while maintaining leverage with tariffs. But it is not enough for the U.S. to focus only on its trade in goods and services with China. Failure to address this emerging threat will undermine U.S. leadership in the global economy and present national security risk.

Leveling the Playing Field

The first step in this effort is to put U.S. companies on a level playing field with Chinese competitors. For decades, international financial transfers have depended on the U.S. dollar as the world’s trade currency. But blockchain and digital currency advances will likely displace legacy payment systems.

The introduction of new technology to make cross border payments faster, cheaper and more transparent is welcome, but
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