Just as the humane man has no enemies, so States wishing to exercise humane authority must be the first to respect the norms they advocate, because leaders of high ethical reputation and great administrative ability are attractive to other states, and winning hearts and minds is more important than winning territory”. Mencius. 300 BC.
Western entrepreneurs used blockchain technology to develop cryptocurrency. China bet it could not only revolutionize global trade but place the Middle Kingdom exactly where it likes to be: in the middle of everything.
The Road Less Taken
Starting in 2015, the People’s Bank of China used blockchain technology to create a trade and payment platform so secure that central banks would trust it and so convenient that grocers would use it. The platform, patented by the PBOC and blessed by the Gnomes of Basel1, lets everyone trade, insure, track and pay for everything securely, cheaply, in real time.
BSN
The Bank’s first product, the Blockchain-based Service Network, BSN, provides a level digital playing field for businesses big and small wanting blockchain functionality. It’s cheap, accessible, ubiquitous, secure, anonymous and fast. Technically, it’s a ‘cross-cloud, cross-portal, cross-framework, global, public infrastructure network anyone can use to deploy and/or operate any type of Blockchain Distributed Application (DApp) anywhere in the world’. Less technically, BSN is a secure platform with built-in blockchain functionality and an easily configured interface.
CBDCs
The first blockchain app the Bank built on the BSN platform was the e-CNY, its Central Bank Digital Currency, or CBDC. “Its programmability makes it a model for ensuring cross-chain communication between the payment blockchain and the business blockchain, so that one party can perform the contract and the other party can automatically deliver it. This brings huge synergy to the industry”. The Bank distributed its e-currency template so that other central banks can customize their versions.
mBridge
The payment system underpinning cross-border financial flows has not kept pace with rapid growth in global economic integration. The global network of correspondent banks that facilitates international payments is hindered by high costs, low speed and transparency, and operational complexities. Banks are also paring back their correspondent networks and services, leaving many participants (notably emerging market and developing economies) without sufficient or affordable access to the global financial system. – BIS.
Earlier in these pages we covered the first blockchain-Distributed App, or DApp, which the Bank calls mBridge. It makes real-time, peer-to-peer, cross-border payments and foreign exchange transactions in local CBDC currencies a one-click affair. Thai refiners buy UAE crude with e-baht, and the UAE sellers simultaneously receive e-dirhams for their oil. For the first time, countries are trading quickly, securely and inexpensively, on their own terms, and in their own currencies. mBridge turbocharges ‘free trade’.
LOGINK
LOGINK, another DApp on the BSN platform, sggregates data from domestic and foreign ports, foreign logistics networks, millions of PRC users and other public databases to provide the most comprehensive picture available of the world’s logistics activities in real time. “LOGINK lets Beijing monitor and shape the international logistics market,” says a US think tank.
PHARMALINK
While the payments blockchain tracks finances, the business blockchain tracks things: China, the world’s largest manufacturer, needs to track the sources, carbon footprint, purity and potency of its purchases and products. This gives rise to hundreds of specialized DApps like Pharmalink. It keeps a secure record of a drug’s entire journey, from to giving ingredient sources it to patients’ digestive system; it securely stores and shares clinical trial data; patients can choose who can access their data; it tracks drug safety data in real time.
Convenor of Covenants
Technologies like CBDCs, mBridge and LOGINK are tips of icebergs supported by a vast bulk that keeps them above water. mBridge is supported by complex covenants between central banks; the Shanghai Cooperative Organization is a security covenant2 between states’ security services; the BRI is a development covenant; GEIDCO3 is an energy covenant, and LOGILINK is a logistics covenant.
They’re all Chinese and they all make life easier, cheaper and safer for the world, and that’s Chinese Statesmanship 101: “By using virtue and practicing benevolence the wise ruler will achieve humane authority, for the humane man has no enemies. Here’s one of the fruits of humane authority:
In Beijing last week, Zambian President Hakainde Hichilema and Xi Jinping became the first leaders to sign all four covenants:
- Belt and Road Initiative
- Global Development Initiative
- Global Security Initiative
- Global Civilization Initiative.
Before our eyes, the Lord of Platforms and Convener of Covenants is creating a new, more tranquil, prosperous world. And not a moment too soon.
There’s every reason to believe that, from China’s point of view, this is the first stage in a very long process of reducing the United States to something like a traditional Chinese client state. David Graeber, Debt, the First 5,000 Years.
Links
How China Uses Shipping for Surveillance and Control. Foreign Policy. Beijing’s global maritime operations double as intelligence-gathering outposts.
Basel is the headquarters of the Bank for International Settlements, whose clients are reserve banks. The BIS blessed China’s mBridge currency platform.
The SCO has four nuclear-armed members.
With $20 trillion invested to date in sharing renewable energy around the globe, timed with the sun’s movement. This is attractive to Eurasia, on which the sun never sets. (Iran’s grid is physically ‘connected’ to China’s grid via Russia’s grid).
