Why does China hate Bitcoin?

[alyssa85]

Here is an interesting marketwatch article about why China hates bitcoin:

http://www.marketwatch.com/story/heres-a-reason-why-china-would-want-to-shut-down-bitcoin-2017-09-20

Last week was tumultuous for bitcoin, as Chinese authorities announced plans to ban the cryptocurrency’s trading in the country.

I am not surprised that Chinese authorities are acting to put a lid on bitcoin BTCUSD, -3.16% trading. What is surprising is why more governments, including the U.S., are not doing the same.

China’s slam of bitcoin should be viewed through how its own currency, the yuan USDCNY, +0.0046%  , correlates to bitcoin. In June the Chinese yuan hit a low of 6.86 to the dollar, while in September amid the bitcoin crackdown the yuan appreciation accelerated, changing hands at one point at 6.44. The bulk of the appreciation in the yuan (fewer yuan per dollar means a stronger yuan) has come in the past three months, just in time for the 19th National Congress of the Communist Party of China next month (see chart).

The point is that the Chinese leadership would do anything to keep the Chinese economy going in order to keep power at this important juncture in Chinese history. Messing with the yuan exchange rate, or with bitcoin for that matter, is one of the tools to meet their goals before the October summit.

The bitcoin ban is a way for China to enforce capital controls, given the $1 trillion that has left the country since the summer of 2014. Foreign exchange reserves have stabilized in 2017, and risen by less than $100 billion. The clampdown on outflows, the rebound in the yuan, and the bitcoin ban all comprise multiple steps taken by Chinese authorities to assure smooth sailing at the National Congress.

The yuan-engineered short squeeze took its first big victim on Sept. 6, when Corriente Advisors threw in the towel after a bearish bet on the yuan resulted in a $240 million loss. Using yuan options, forwards, and most other derivatives unfortunately makes any bear easily detectable by the Chinese authorities, who in some cases directly oversee the financial intermediaries that facilitate those bets in Hong Kong. So, if the Chinese authorities know where the shorts are and what the terms of the derivative contract are, it won't be hard to squeeze them with $3 trillion in forex reserves. This is precisely what they may be doing.

Two years in a row, we experienced huge overnight spikes in the Hongkong Inter-Bank Offer Rate (HIBOR) market, where in one case overnight yuan borrowing costs rose to 66%, while the following year they topped 100%. I have no doubt that the People’s Bank of China engineered those moves in order to squeeze the yuan shorts on multiple fronts. The latest sharp appreciation of the yuan before the October summit is also designed to do damage to yuan bears and to show that the PBOC is in control of the Chinese financial system.

The PBOC-engineered short squeezes do absolutely nothing to change the dynamic in which the Chinese economy's growth rate has slowed dramatically, while borrowing has surged and keep surging. China's "total social financing" does not include shadow banking leverage, which adds another 100% to the total debt to GDP leverage ratio, making the total close to 400% and still rising (see chart).

When I examined this dynamic of rising leverage ratios and a slowing economy, coupled with a stock market crash in 2015, I thought that by 2017 the strain in the financial system would begin to show and the Chinese economy would experience a hard landing. The fact that it has not happened does not mean it won't happen. There is no such thing as "controlling a credit bubble" after it begins to pop. The Chinese authorities may have slowed this process down, but I doubt they will be able to prevent the hard landing. Watch out in 2018.

[bitbunnny]

The chinese government is actively cracking down on anything, that will allow its wealthy citizens to get wealth out of the country. Bitcoin, is obviously a great tool for this, and is therefore an enemy of the communist party.

It is not the Chinese that hates bitcoin it is the Chinese government, they are very greedy they don't want bitcoin because they cannot control it and since they cannot control it they will not know if how much money is their Chinese people earning to it, their people  can avoid to pay taxes because of the anonymity of users and they really hate it.

This is not true. Chinese government doesn't hate Bitcoins and it's not about the money, they simply wanted to introduce the regulation. Ok, they haven't done that in the best possible manner but regulation doesn't mean centralization of Bitcoins what some users think and doesn't necessary have to be wrong or do harm to Bitcoin.

[lumeire]

The chinese government is actively cracking down on anything, that will allow its wealthy citizens to get wealth out of the country. Bitcoin, is obviously a great tool for this, and is therefore an enemy of the communist party.

It is not the Chinese that hates bitcoin it is the Chinese government, they are very greedy they don't want bitcoin because they cannot control it and since they cannot control it they will not know if how much money is their Chinese people earning to it, their people  can avoid to pay taxes because of the anonymity of users and they really hate it.

This is not true. Chinese government doesn't hate Bitcoins and it's not about the money, they simply wanted to introduce the regulation. Ok, they haven't done that in the best possible manner but regulation doesn't mean centralization of Bitcoins what some users think and doesn't necessary have to be wrong or do harm to Bitcoin.

Well they should've formed the regulations before enforcing them. What seemed to happen was they enforced them first without the actual rules established yet.

[affandi]

china is unlikely to hate bitcoin, if china hates bitcoin then china is unlikely to help develop bitcoin until it reach highest price this year. I had time to think, maybe china wants to create a new coin that later can be controlled by the government.

[halych]

China does not envision bitcoin, but simply wants to control it. I'm sure that with after some time, China will again resolve bitcoin, but it will be necessary to pass the identification procedure.

[pushups44]

I think the elites of China are confused about bitcoin and don't know how to deal with it. They are used to centralized control, whereas bitcoin is about stateless decentralization. However, taking an anti-bitcoin stance can potentially damage the economy in the long run, as blockchain technology becomes more essential. I think slowly the Chinese government will warm up to bitcoin and other cryptocurrencies.

[shintosai]

I think the elites of China are confused about bitcoin and don't know how to deal with it. They are used to centralized control, whereas bitcoin is about stateless decentralization. However, taking an anti-bitcoin stance can potentially damage the ecobnomy in the long run, as blockchain technology becomes more essential. I think slowly the Chinese government will warm up to bitcoin and other cryptocurrencies.

Well that's right many people from China doesn't understand how crypto works and that's why they wanted to make a clear understanding first, afterwards when they seen potentials they will re assess and for sure they will continue supporting if they feel that they will earn from this system.

[Clark05]

I think why china ban bitcoin because of power people and thats not all. For sure many of chinese people love bitcoin they want to continue in bitcoin but in their country bitcoin will be officially ban in september . But we dont know if its true or not. I hope china will continue again to accept bitcoin so bitcoin world become happy brcause we our complete. But it depends to them.

[litec0ins]

They don't hate btc. They just love their own yuan a little more.. They will go to any lengths to protect it.

[alfs75]

This is pretty much the whole story right here...

" NIFA official Li Lihui told a technology conference in Shanghai on Friday that a goal of China’s monetary regulation is to ensure that “the source and destination of every piece of money can be tracked.” "

Bitcoin is the mortal enemy of 'tracking'.  Therefore China is going to continue to assault Bitcoin from every angle.  You can be sure of that.

Im thinking why should china hate bitcoin?in my own opinion china hate bitcoin because mostly chinese people are patriotic in their own currency and they didnt want foreign countries to rule there economy.china also didn't much understand  bitcoin maybe there not open minded and there knowledge of bitcoin is limited that why they did nit accept this kind of currency .

[zekeshawn]

I think China doesn't hate bitcoin they just want to protect their people from scam ICO's or maybe they want to trick bitcoiners so that they can buy more bitcoin when people start dumping. The news could be a strategy to accumulate more bitcoin.

[moamin77]

I believe it is not only China.....All similar governments don't want their folks' money to slip away from their control

[mobnepal]

We may soon see another altcoin emerging from china and will be known as chinese bitcoin, all of its transaction can be tracked and government can easily reverse transactions or froze accounts whenever they want.

China might be preparing for launch of their own state owned version of bitcoin.  

[EUROPEANTURK]

I dont think China hate bitcoin just they afraid bitcoin will getting weak their local money ,because chinese people want invest to bitcoin more than yuan.

[techindo]

because the Chinese government does not like something that can not be control.
the Chinese government also wants to protect its people from the threat of ico scam.
the government will someday make regulation about cryptocurrency.

[gyu22]

Everything that can be out of the control of an authoritarian goverment is a thread. They ban because the can. But Bitcoin will continue elsewhere. Actually, since China gov. announce exchange will close by the end of september, traders have moved to Japan, where regulations and policies are more clear an efficient. According to various trusted Bitcoin market data providers such as CryptoCompare, China only accounts for 6.4 percent of global Bitcoin trades at the time of reporting.

https://cointelegraph.com/news/japan-becomes-largest-bitcoin-market-as-traders-leave-china

[balakang00]

I think the issue here is that bitcoin is untraceable. The China government cannot control the flow of money in bitcoin nor they dont't know where the money came from. And that's why china hates bitcoin.

[Catmony]

I think the issue here is that bitcoin is untraceable. The China government cannot control the flow of money in bitcoin nor they dont't know where the money came from. And that's why china hates bitcoin.

This is issue for each and every country, bitcoin is a threat for all of those countries who have high inflation rate and strong control over cross border fiat transfer.

With bitcoin people can save themselves from very high inflation rate of their local fiat and they can send their earning out of the country for almost free. This will affect what government can collect in taxes, that's why every government and bankers are against bitcoin.

[farhansadik]

The main reason Bitcoin is decentralized . No centralized government bank can tolerate a decentralized exchange.
May be China wants to open a centralized crypto currency which is fully controlled by china bank Or Govt.

[Ariess]

I think so. about china. china always wants to be a monopoly trade for asia region. yes china always boycotted the famous brand, with their license. but often far from good quality. that's china.
and I think they want to monopolize the bitcoin.