Chinese Yuan No Longer The Only People's Currency

from the more-effective-than-angry-trade-reps dept

Mon, Dec 11th 2006 7:26am — Joseph Weisenthal

One of the chief policy concerns for the Chinese government, in recent years, has been the value of the national currency, the Yuan. The government is convinced that for the time being, it must artificially manipulate its value, so as to preserve the robust economy. But while it can intervene to affect the Yuan, it has little control over alternative currencies, such as those found online. It's apparently concerned that an online currency called QQ, maintained by a large IM system, could induce unwanted, real-world volatility, as people start using the QQ as a substitute for the Yuan to buy certain goods and services. For the most part, it's hard to imagine that this could be too destabilizing. It's mainly for the purposes of international trade that China wants a stable Yuan, and it's unlikely that too many manufacturers will start accepting payments in QQ. Still, the Chinese government tends to feel threatened anytime people are able to express themeselves spontaneously, in some manner outside of endorsed channels, hence the constant internet censorship. It wouldn't be a surprise to see it take a similarly confrontational stance towards alternative currencies. The legal implications of virtual worlds and currencies are just starting to be debated in the US; it should be very interesting to see how things differ when the anarchic freedom found in them collides with stricter societies and economies.

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14 Comments

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SPR, 11 Dec 2006 @ 8:24am

Wonder if they take PayPal?
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Anonymous Coward, 11 Dec 2006 @ 8:51am

Re:
Your comment doesn't make sense. There is a PayPal for China, and it deals in the official currency, yuan. Paypal isn't a currency.
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Shohat, 11 Dec 2006 @ 8:57am

The Absurd
The absurd thing is that Democracy & Capitalism is slowly breaking into China , instead of China' communism (the more advanced form) expanding to other contries.
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Anonymous Coward, 11 Dec 2006 @ 8:58am

Disregarding what I think about currency manipulation... why buy any other currency? It's a sure bet that it's going to grow in value over time as the government brings it a little more in line to where it should be, where as the QQ or any other currency is volatile. Makes the yuan sound like the smart-mans currency trade.
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Lionel Mandrake, 11 Dec 2006 @ 10:02am

Play Money?
I believe that General Ripper said it best:

"I can no longer sit back and allow Communist infiltration, Communist indoctrination, communist subversion, and the international Communist conspiracy to sap and impurify all of our precious bodily fluids."

After the Chinese (and WalMart) complete their process of "helping" us turn our own currency into the "play money" that it's becoming, can the purity of our (precious) bodily fluids be that far behind?

As a country with a 5000-year history, they can be quite patient.

LM
Peace on Earth
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AVonGauss, 11 Dec 2006 @ 10:40am

Virtual...
Why does everyone want to term things like this as "virtual". If you receive currency or goods that you can hold in your "real world" hands, it ain't virtual...
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Que, 11 Dec 2006 @ 12:03pm

Re: Re:
I thought the QQ was another currency, like WoW Gold (which the Chinese have A LOT of)
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The Original Just Me, 11 Dec 2006 @ 12:53pm

Real vs. Virtual
Everything is virtual, why doesn't anyone see this? When was the last time someone reading this received a physical paper paycheck on Friday afternoon? Or made a car payment with a bag of money?

Direct deposit is great, I use it, but it requires a leap of faith because it deals in the concept of money rather than actual coins and bills.

As long as the currancy can be freely exchanged it doesn't matter if it is Yuan or Dollars in your bank, or Linden Dollars or WOW Gold, it is all the same, and none of it is real. Embrace the change and get over the loss of real money.
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dorpus, 11 Dec 2006 @ 1:10pm

Microcurrencies
Is this just another of those worthless microcurrencies that were issued by various small towns throughout North America in the 1990s? People then talked about microcurrencies being the "wave of the future".
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Joshua, 11 Dec 2006 @ 1:26pm

I could see this as a kind of precursor to the kind of systems of money like in Neal Stephenson's Snow Crash and Cryptonomicon (KongBucks in the former and the data haven in the later). Remove control of money from the government and you end up with a bunch of autonomous entities that can move with the market much swifter and thus the fall of or destabilization of a government will likely not have the same disasterous effects (if China had a revolution, QQ could be an immediate stable stand in). I don't know if it is a good thing, but it doesn't look entirely bad.
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dorpus, 11 Dec 2006 @ 1:30pm

Re:
When control of money is removed from the government, what is to prevent counterfeiters or other frauds from taking over the system? Who will enforce against it?
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Joshua, 11 Dec 2006 @ 2:45pm

Re: Re:

When control of money is removed from the government, what is to prevent counterfeiters or other frauds from taking over the system? Who will enforce against it?
An insecure system that does not take into account and prevent counterfitting would fall into disuse and fail. I am by no means a capitalist or a true believer in the free market, but this is one area I have no trouble believing that people wouldn't just jump ship if it begins sinking. I also wouldn't disregard the effects of being able to have accounts with more than one such money controlling entity (anyone have a name for what that is called?) and so having the additional security of not relying one a single organization.

The easiest and most effective way to prevent counterfitting is cryptography (which, in China and until recently most of Europe, I admit would not necessarily be easy). QQ is an entirely electronic money (at least that's the impression I got) and so would be fairly easy to prevent counterfitting.

If they ever moved into physical money then they would use the same techniques that governments currently use: make it so hard and expensive as to be not worth it to counterfit it. Frequently changing the parts of the money that make it so hard to copy would also increase security. For instance you could give a lengthy timeframe to change your old money for new, say a year, and verify all the old money being changed so as to keep in circulation only fairly current versions of the money.

The goal would be to make enforcement as easy as requiring verification before accepting a transfer of funds. We already do this here with government issued money. Sales clerks check that that little strip is in the $100 bill and ATMs and banks use encryption to verify all money transfers as genuine (it uses a crappy key in some cases, pin #s, but the underlying system is still there).
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harry, 12 Dec 2006 @ 5:22am

A "large" instant messenger?

A fairly bloody massive one, I'd say:
http://www.alexaholic.com/qq.com+skype.com+icq.com

*Everyone* on the internet in China uses QQ.
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John Doe, 14 Dec 2006 @ 3:53am

In regards to The Absurd's comment
The absurd, history has thought us that communism does not work in any form so far. It is like trying to defy gravity, your really have to be brainless at this point to honestly think communism will survive especially in an era of advancing technology. If you cannot graps the reason why Democracy and Capitalism pay off and win, read more books until you do understand.
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