A visual representation of the digital cryptocurrency Bitcoin Photo: AFP

China's determination to become a bellwether in digital currencies has never been clearer given its all-out efforts.

Last week, Chinese financial regulators announced plans to wage a new crackdown on cryptocurrency exchanges operating illegally in the country, warning of the rising speculative risks associated with the illegal trading of virtual currencies. The development ramped up pressure on bitcoin, which slumped to a six-month low on Friday.

If anything, the move highlighted the Chinese government's seriousness about the digital currency that the People's Bank of China (PBC), the country's central bank, is about to roll out - its own digital currency electronic payment (DC/EP) system. In that sense, China's strengthened regulation of the digital currency market is not only aimed at preparing a good market environment for the launch of the state-run digital currency, it is also meant to lay a solid foundation for the competitiveness of its own digital currency.

So far, China's widely anticipated digital currency, backed by the central bank, already has almost everything essential for being at the forefront of the world and ensuring its smooth development. In terms of technology, the PBC has attached great importance to digital currency research over the past five years. 

As of early August, the PBC had applied for 74 patents involved with the DC/EP project to the National Intellectual Property Administration, according to data from the central bank.

Moreover, China is marching toward a cashless society, with proximity mobile payment users growing by 10 percent in 2019 to reach 577.4 million, the largest in the world, according to research firm eMarketer.

Yet, the most crucial advantage is ought to be the explicit support to the development of digital currency from regulators. 

When the legitimacy of Facebook's Libra is still hotly debated in the US and elsewhere in the world, China's central bank is nearly ready to launch its own cryptocurrency. Chinese regulators have been taking measures to rectify illegal trading and speculation of virtual currencies in the country, thus ensuring a good market environment for the smooth development of the new digital currency. 

To a certain extent, how China will improve its national competitiveness will depend on its financial capability. Digital currency, together with the opening-up and management of financial markets, will be at the core of China's financial capability in the years to come. 

Developing our own representative digital currency and becoming a bellwether in the global digital currency field is of strategic importance to China's future influence on the global payment and monetary system, especially at a time when US financial hegemony persists.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn
Newspaper headline: China’s head start in digital currency gives edge