Escalating Tensions Between Europe and the USA, and China: The Effect on Blockchain
Tension between China and the United States of America has once again resumed.
China has accused the United States of inciting other countries “to attack China”.
While the bout between both countries drags on (including an ongoing trade war) Europe is being sucked in.
The reach of blockchain projects are being limited, owed, in part, to the ongoing trade war
China, a global superpower, has endured strained relationships with other superpowers, including those in Europe and the United States of America.
Although blockchain is not the most prominent topic of contention among these nations, the industry has been affected because of the stake these countries hold. China, for example, has blockchain companies such as NEO Smart Economy, CargoX, VeChain Tech, Pragmatic DLT inc.
The United States Vs. China
The United States (U.S.) Vs. China was a major source of concern during President Trumps administration. However, the strained relationship between both superpowers appears to have dragged on, entering the concerns of the new administration.
The first high-level talks between the Biden administration and China held in Alaska in March, ended in less than ideal circumstances. In the March 19 meeting, some Chinese officials accused the U.S. of inciting other countries “to attack China”, while U.S. officials stated that China had “arrived intent on grandstanding”.
The U.S. and China have historic disagreements surrounding trade, where the U.S. has accused China of unfair trade practices. The U.S. has also accused China of genocide against the Uighur population in the province of Xinjiang.
As tensions continue to escalate between the U.S. and China, especially the trade war, it becomes increasingly difficult for Europe to stay quiet and impartial.
In February, French President, Emmanuel Macron described the “situation to join all together against China”, as a “scenario of the highest possible conflictuality,” something he believes could be “counterproductive.”
Effects of the Rifts on Blockchain
In the past China has mentioned it aims to reduce its reliance on the United States. President Xi Jinping has also endorsed blockchain in the country and instituted the Blockchain-based Service Network (BSN).
In terms of blockchain dominance, China sits miles ahead of the United States, by virtue of being a pro-blockchain nation. However, this ongoing competition has been detrimental to the growth of the blockchain industry in some ways.
One major consequence of the rifts between these nations on the blockchain industry is the detrimental effects its had on the amount of large cross-border acquisitions.
Jon Shames of EY Global Geostrategic Business Group comments that;
“The tense relations between the U.S. and China, and their high degree of economic interdependence, create an operating environment that companies are finding increasingly challenging”
This turbulent relationship has also limited the scope and market available for many blockchain companies. Coinbase, one of the leading crypto exchanges based in California, U.S, is not available for the Chinese market.
On the Flipside
The Bank of Jamaica has partnered with an Ireland-based blockchain project in its quest for the CBDC.
The bank announced a partnership with Irelands eCurrency Mint Incorporated for its pilot program.
Jamaicas CBDC pilot project will begin in May and end in December 2021.
While the United States, as well as many countries in Europe, favour decentralized or public blockchains, Chinas BSN has emphasised private blockchain, even taking an almost centralized stance towards cryptos.
This means that blockchain projects are, by law, limited in their entry into China, one of the biggest blockchain and crypto markets in the world. The reverse also holds true; as long as the trade war continues, the reach of blockchain projects will likely remain limited in some regions.
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