What is the new “China Model”? And why should this country forbid an industry that has made it the ultimate leaders in major developments in recent times? The world is still scratching its head. This story must have something else. Do you just want control? Or does China have a secret plan that no one found out?
At NewsBTC, we investigated the case, searched for clues and reported on related news. After the ban, when Bitcoin’s hash rate collapsed, we theorized Lucas Nuzzi of Bitcoin Magazine that it was all related to the Digital Yuan, China’s CBDC. Then we found out that Chinese entrepreneurs were selling small hydropower plants and wondered if their closure was part of their plan. After that, the shocking revelation revealed that China’s dominance over Bitcoin mining was waning before the ban raised more questions than answers.
The fine folks at Bloomberg may have found new clues by addressing a related but different issue. In the article titled “The China Model: What the Country’s Tech Crackdown Is Really About” they theory the reasons for the government’s attack on Alibaba and DiDi. Two of China’s giant unicorn tech companies that are also world leaders in their respective fields. Bloomberg believes that after years of following in the footsteps of Silicon Valley, China is trying a new model.
Do they have a case or do China’s motives remain a mystery to us Westerners? Read on to find out.
What is the new China model made of?
The article begins with a summary of what happened when Uber clone DiDi and “Alibaba’s fintech subsidiary Ant Group Co.” tries to go public in the US. The Chinese government took action against both companies. As a result, Alibaba’s Jack Ma disappeared from the public eye.
“Just because you’re a very successful technology company doesn’t mean you’re above the CCP,” said Michael Witt, senior associate professor of strategy and international business at Insead in Singapore. “Ant Group and Jack Ma found out for themselves last year, and it’s surprising that DiDi didn’t get the message.”
What does this “China model” have to do with Bitcoin mining? Well, the Chinese government seems to be cracking down on anything large and technological that is inconsistent with their interests. And we in the industry know how much bitcoin these giant mines produced.
“China actually leads the way when it comes to limiting the power of big tech,” said Thomas Tsao, co-founder of Gobi Partners, a venture capital company based in Shanghai. “The people lack the overall picture. You are trying out a new model. ”
Is size the problem for the Chinese government?
As we learned when analyzing the article “The Death Of China’s Bitcoin Mining Industry”, individuals can still mine. China only banned industrial bitcoin mining.
“Despite the government’s tough approach, Ye is determined to keep going:” This industry is extremely volatile. High emotions and stress are involved, but that is also the attraction. Corporations are banned from mining Bitcoin, but individuals are not, “Ye said, adding that he plans to reverse his operations by buying old equipment and downsizing.
The Chinese government was only concerned about industrial-scale private mining operations. The question is why. What are you planning?
The Chinese government seems to be playing a similar game when it comes to big tech.
Andy Tian, who led Google China’s mobile strategy in the 2000s and is now CEO of Beijing social media startup Asian Innovations Group, says it will be “positive for innovation” and “competition in China will be fiercer.” will be than in the US “because small businesses will benefit from policies that curb their biggest competitors.
And they are taking advantage of the land’s unique characteristics to do so quickly and mercilessly.
Angela Zhang, director of the Center for Chinese Law at Hong Kong University and author of Chinese Antitrust Exceptionalism, says the intervention will reshape the tech industry in China faster than it could anywhere else. “The Alibaba case only took the Chinese antitrust authorities four months to complete, while it will take years for US and EU regulators to crack down on tech companies like Facebook, Google and Amazon who are ready to fight tooth and nail .” She says.
BTC price chart for 08/10/2021 on Coinbase | Source: BTC/USD on TradingView.com
What does the new China model want to achieve?
This is where Bloomberg’s case falls flat. You have no idea what the Chinese are thinking.
If China abandons the Silicon Valley model, what will it replace it with? Insiders suspect it will be less founder-oriented and more China-centric.
Why is China dwarfing its largest industries and players? Is the “China Model” just about the scale? Or is control your focus? Are you cracking down on people and companies with too much power that operate on a global scale? We wouldn’t know. However, the facts and assumptions in this paragraph could provide a guide.
Xi has called the data its tech industry gathers “an essential and strategic resource” and has been pushing for years to unlock it. Following a mandate from 2015, cities from Guiyang to Shanghai have set up a data exchange that facilitates the transfer of anonymized information between companies. This could lead to a nationalized data exchange system that serves as a kind of digital public infrastructure and puts a huge treasure trove of data in the hands of the central government.
Is it data they are after? Are you scared of Bitcoin’s pseudo-anonymity? Are your actions against Big Tech even related to your actions against Bitcoin mining? We can only know one thing for sure: China is taking great coordinated steps when it comes to technology. And they seem to have a plan. A new “China model” if you will.
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