Recent comments by a former central bank chief underscore the mix of excitement and anxiety China has around technologies such as crypto-currencies, peer-to-peer lending and new payment techniques.

The former chief of China’s central bank has defended the Asian giant’s crackdown on bitcoin and certain internet-driven financial channels, arguing they could hamper monetary policy, make markets less stable and even threaten national sovereignty. Such remarks say much about how the fast-rising Asian nation has an ambivalent relationship with disruptive tech - something for wealth managers to remember.

The remarks, reported in the South China Morning Post, came from Zhou Xiaochuan at a conference a few days ago.

China’s ban on bitcoin, and its crackdown on other areas, contrasts with a patchwork of rules enacted by other jurisdictions, such as Singapore, Canada and Switzerland, for example. 

Paradoxically, some of crypto-currencies’ most fervent advocates, such as Don Tapscott and Alex Tapscott (authors of Blockchain Revolution, 2018) argue that the concerns about monetary policy, for example, are actually reasons for desiring such new currencies, because of how traditional fiat money has been, they argue, routinely abused by governments. One advocate of such new money, Dr Saifedean Ammous, wrote a book called The Bitcoin Standard, a title that nods towards the idea of the old 19th Century gold standard. 

With sectors including the wealth management industry seen as being buffeted by technologies such as crypto-currencies and the blockchain distributed ledger systems that underpin these currencies, China’s tough stance may not last forever, but it also shows how political systems and technology can collide. The world’s second-largest economy wants to be seen as a tech heavyweight, but it also fears how certain innovations may get out of hand.

Zhou Xiaochuan argues that policymakers and regulators need to pick and choose which technologies are beneficial and which are not. “We need to judge which ones are progressive technologies and which ones are subversive,” he said, adding that “technology must be used for the good things”, citing the use of the “dark net” for illegal activities, such as money laundering and financing terrorism, he is quoted by the SCMP as saying.

As the report notes, China is trying to eliminate threats – as it sees them – from the financial system caused by technologies such as electronic payments, peer-to-peer lending and bitcoin trading.

Bitcoin’s roller-coaster price ride of the past few years – surging last year and then falling to earth with a thump in 2018 – has been likened in parts to the Dutch tulip speculative bubble of the early 17th Century. What is sometimes overlooked is that after all the anger of the lost fortunes had been forgotten in the Netherlands, that country remained famous for its vast horticulture and fresh flowers industry. One wonders when, or if, China accommodates new technologies. Will it want to stamp them out entirely? It will be hard for China’s rulers to sit tight if rival countries let the tech rip.