China’s bid for world domination

The rumour that China plans to dominate the world has been circulating for decades. Its isolation from the West for a significant period of time made it even easier to turn the country into a Bogey Man. Some argued that it was a misunderstood country, whilst others held firmly to the view that China could never be trusted. These days, with greater media coverage of the world’s most populous country, we perhaps have a clearer view of its ambitions, and it seems some of the old rumours contain more than a grain of the truth.

Global expansionism is one of China’s tools. John Glynn writes that Beijing’s ‘Going Global’ strategy emerged in 1999, and it signalled the end of the “Mao-era mindset of self-reliance.” China suddenly started taking advantage of a boom in world trade and global market investments. Glyn says, “The idea that one government could commandeer sub regions in Asia, Europe and Africa, which account for 64 percent of world population and 30 percent of world GDP, might sound ludicrous. But try telling this to the Chinese government.”

Glyn also warns in his article that President Xi is engaged in an ideological and economic venture, and that it is clear the country has massive global ambitions, if its investments are anything to go by: “Between 2005 and 2017, the combined value of China’s global investment in construction was $1.8Trillion.”

What does it construct? The Chinese Government is making a concerted effort to increase infrastructural, economic, and political connectivity between China and the other countries of Asia, Africa, and Europe. Glyn calls it a “Belt and Road” initiative. But as he also says, it is essentially a new Silk Road connecting China to the rest of the world.

Glyn also remarks, “While other countries find themselves consumed by petty squabbles, Beijing officials discuss square footage, potential monetary gain, and militaristic strategies.”

It has invested widely in Energy, Transport, Real Estate and Metals — the key ingredients for developing infrastructure, and this has worried the Western governments, particularly the Trump presidency. That’s why he’s so keen to buy Greenland, an island mass that is rich in rare earth metals.

It is also the case that China has been involved in lending large amounts to other countries, and some fear that part of its strategy is to saddle these countries with “unimaginable levels of debt.” Furthermore a lot of this debt is “hidden” and that is especially worrying. Hidden debt means that the borrowing isn’t reported to or recorded by official institutions. A Kiel Institute study found that other countries’ debt owed to China has soared ten-fold since 2000, and it stated, “This has transformed China into the largest official creditor, easily surpassing the IMF or the World Bank.”

Much of this money is going to emerging markets. This is not because China wants to help grow these economies, but because it allows China to put those countries in a position of “indentured servitude.”

It is also looking to expand its military bases internationally. The US defence department expects China to add military bases around the world to protect its investments in its One Belt One Road initiative. Currently Beijing currently has just one overseas military base, in Djibouti. However, officials are planning others, including one in Pakistan.

This repressive regime has global ambitions and they are closer to being a reality than ever. Can China be stopped? The answer would appear to be — NO!

Why is Litecoin Doing so Well?

Today Litecoin is up 62% on the month, 24% on the week and a solid 200% on the year. Its price has dipped a tiny 2% at the time of writing, but it is still possible to say that Litecoin has been doing remarkably well during this latest surge in the crypto markets.

Litecoin began 2019 at around $30, representing a dramatic plunge in price during 2018. As ever, people are looking for explanations for this reversal of fortune. Billy Bambrough, writing at Forbes believes that it may in part be due to the upcoming halvening of bitcoin, which will happen in May next year. Halvenings always seem to trigger a price surge. The bitcoin event will result in he number of bitcoins awarded to miners for mining new bitcoin blocks will drop from 12.5 bitcoin to 6.25 bitcoin. “We are going to hoard bitcoin at this point in time,” Brian Kelly, a bitcoin and cryptocurrency fund manager told CNBC. “We’re not going to sell it. You generally have a rally a year into [a bitcoin halvening], and a year out of it. And so we’re just at the beginning of that stage […] a supply cut is generally bullish.”

A halving and more use of litecoin

Litecoin is due to halve its miner rewards in August of this year, and if the economic theory applied to bitcoin’s supply reduction due to the halvening are correct, it will also apply to litecoin, which will see its mining reward fall from 25 litecoin to 12.5 litecoin.

What has happened during previous bitcoin halvenings, which are fixed events that occur after every 210,000 blocks have been mined. For example, about one year after the first bitcoin halving event in November 2012, the bitcoin price reached what was then an all-time high of $1,000. And the 2016 halvening appeared to precipitate the bull run of 2017 when bitcoin touched almost $20,000.

But it isn’t just Litecoin’s upcoming halvening that has boosted its price. Over the last few months litecoin has gone through some technical improvements and it is being spent via Coinbase Visa cards at millions of locations worldwide. Coinbase users can choose which cryptocurrency is used on the card through a new app that supports all crypto assets available to buy and sell on the Coinbase platform. The app also offers instant receipts, transaction summaries, and spending categories, to help people keep track of their spending.

Litecoin has been seen as one of the most credible rivals to bitcoin for some time; perhaps this is the year when it finally asserts itself as a serious contender in the crypto market.

Facebook’s Globalcoin is coming soon

We have learnt in the last few days that Facebook is poised to launch its ‘Globalcoin’ in 2020. Currently, the media giant is consulting with US financial regulatory authorities, as well as those of 11 other countries about operational and regulatory issues. It is likely that the token will be tested before the end of 2019.

Apparently Facebook’s CEO Mark Zuckerberg has also been having lengthy discussions with Mark Carney, the governor of the Bank of England about the opportunities and risks involved in launching the company’s cryptocurrency. So, it seems likely that the UK will be one of the countries where Globalcoin will be available.

There are also ongoing meetings between Facebook and some of the world’s payment giants, such as Western Union and Paypal, as well as online merchants, as it looks for cheaper and faster ways for people without a bank account to send and receive money.

Facebook may dominate the payments sector

Because that is Facebook’s overall aim: to move into this valuable financial sector. According to International Business Times, “Facebook wants to develop GlobalCoin into a digital currency that provides affordable and secure ways of making payments. Facebook also wants to enable people to change dollars and other international currencies into its GlobalCoin with the minimum of fuss.”

How will it achieve this goal? It would appear that Facebook is going to issue Globalcoin as a ‘stablecoin’ pegged to the US dollar. This eliminates the volatility that is a challenging factor of the crypto market, at least for merchants and payment service providers.

Will lack of consumer trust damage Globalcoin?

Still, things may not be all plain sailing for Facebook. There is the matter of consumer trust for a start. In the last two years Facebook has been named in a mnumber of scandals concerning the sharing of user data with other parties; Cambridge Analytica being the most notable one. Zuckerberg has been forced to testify in front of both the US and UK governments regarding this, and Zuckerberg’s conduct in both cases gave rise to a feeling that the company has behaved with some arrogance and belief that it is untouchable. Therefore, Facebook users may not be rushing to use the new token: instead it is entirely possible that they many will walk away from it as a form of protest. On the other hand, if the token is seen to provide a useful service, it may do well. It has billions of users so a few protesters may not make much difference to its success.

Analysts say Facebook wants to disrupt existing banking networks by breaking down financial barriers and reducing consumer costs. However, Facebook will have to partner with banks and brokers to attain this aim. Plus, GlobalCoin will need to overcome numerous technical and regulatory hurdles before it can be launched.

There are countries where it may get a warm reception and others, like India, where there be no welcome at all. Significantly, it is rumoured that Facebook is particularly interested in launching in India, which makes sense when you think of the size of the population and the fact that there are many, many unbanked Indian citizens that own a smartphone. Facebook also hopes GlobalCoin will allow Indian workers abroad to remit money back home to their families using WhatsApp, which is another big market. However, as India has been fairly hostile to cryptocurrencies to date, this may prove to be a significant challenge.

It won’t be to long before we have a better idea of Facebook’s precise strategy, but given that it is one of the biggest players in social media, it seem unlikely that it will settle for being a small fish in the crypto sector.

Should you give up your Huawei smartphone?

Hot on the heels of the US government putting Huawei on a blacklist, Google stepped in and announced it is blocking Huawei’s access to Android updates for apps and security features.

This is a blow to the Chinese smartphone and telecoms tech manufacturer, and creates a problem for Huawei phone owners.

Google is following the government policy prohibiting US firms to do business with Huawei. As a result Google has been forced to restrict the company’s access to the Google Play Store, which means that in the future users won’t be able to gain access to popular titles, nor to speedy security updates to the Android OS. This means Huawei will no longer be able to offer access to crucial Google apps, and will be severely limited in how quickly it can give users access to the latest versions of Android.

If you’re a Huawei phone owner you must be wondering what to do next. Well, there is some good news. According to TechRadar the “US Commerce Department has temporarily lifted the ban on American businesses working with Huawei — allowing software updates to continue on Huawei phones.”

This temporary licence rolls back the US government’s restrictions and will allow Google to continue working with Huawei, allowing the Chinese brand to keep using Android in the same manner as before until 19th August.

This is good news for Huawei, because it gives it more time to “prepare for the launch of its next handsets and develop the Android Q update for its current smartphones,” TechRadar reports.

However, whilst Huawei has given the impression that it is relatively unperturbed by the US government and Google’s actions, it still leaves it in a vulnerable position in the marketplace without full access to the Android operating system.

But it also gives Huawei more time to argue the case for not being on the US government’s blacklist and prove that it is not a danger to national security. The USA is not the only country that believes Huawei’s products may play a role in Chinese espionage, particularly with regard to building 5G systems. Japan, Australia and New Zealand have also banned the use of Huawei products for 5G, and others may follow.

But while the debate continues, Huawei smartphone owners may need to consider whether to continue using its phones, or change to another company. Interestingly, on the day the news about Google and Huawei was published, I noticed Apple was running a new ad campaign. Coincidence? It seems unlikely.