After the economic collapse in China, The Chinese Government has been trying its best possible to get out of this situation. However, reports suggest that PBOC is carrying out the newly launched financial reforms & it is determined to increase the money supply at a certain level which was not happening for a long time. You can check Profit Edge to learn more about bitcoin trading.
The Government has lost its control over currency exchange rates. For example, bitcoin, as you all know that it is a decentralized digital currency that any government does not control.
The decentralized currency can’t be tracked or known, so getting tax from bitcoin trading is impossible. The money earned there stays outside China and boosts investment in other countries, hurting their economy and decreasing Chinese economic growth.
9 Negatives of bitcoin that affects China’s economic growth
- Trade-in bitcoin increases outside China at a higher rate, which is not suitable for Chinese economic growth.
- Lesser money supply in the market will decrease the GDP of China, which is terrible for future investments and trade by other countries with China.
- As fewer people are trading in yuan, it leads to less demand for yuan, negatively impacting Chinese economic growth.
- No tax is being charged from the bitcoin trade, so it’s terrible for government finance as there is no chance to increase their revenue.
- Lesser money supply in the market will decrease the GDP of China, which is terrible for future investments and trade by other countries with China.
- As China’s economy is based on export and import, less trade-in yuan will lower the demand for yuan, which harms Chinese economic growth.
- No tax is being charged from the bitcoin trade, so it’s terrible for government finance as there is no chance to increase their revenue.
- As bitcoin can be used to carry out illegal trades, chances are more that unlawful trading will increase outside China, which will result in lost revenue for the Chinese Government, again decreasing the growth of China’s economy.
- As bitcoin is decentralized, it cannot be controlled by any government, which again decreases the growth of China’s economy as trade-in yuan currencies will reduce day by day.
7 Positive effects of bitcoin on the economy of China
- An increase in export because of fewer restrictions on trade led to more business outside China.
- An increase in foreign investment as trading is based on bitcoin, not yuan, increasing demand for yuan, which is good for Chinese economic growth.
- The wealth earned by bitcoin stays within china and can be traced back to the yuan, which increases demand for yuan.
- It can increase digital payment through apps and websites, so it’s good for Chinese economic growth.
- Lesser taxes need to be given by the Government on bitcoin trade than yuan trade as transactions happen in bitcoin, not yuan.
- More job opportunities are created due to the bitcoin trade as more websites and apps are needed to be developed, which is helpful for Chinese economic growth.
- An increase in foreign investment as trading is based on bitcoin, not yuan, increasing demand for yuan, which is good for Chinese economic growth.
Is Bitcoin legal in China?
The legality of the bitcoin and cryptocurrency market in China is unclear as the Government does not officially ban it. However, some rules and regulations come from the Chinese Government, such as warning against risks involved, prohibition of investments by companies, etc.
However, there is no official statement from PBoC about the legality or regulation of virtual currencies such as bitcoin in china.
Do Chinese people invest in bitcoin?
Many Chinese bitcoin investors have invested in this currency. As Chinese people are more inclined towards the digital world, they are ready to invest in cryptocurrencies. Bitcoin can be traded through websites and apps, allowing Chinese people to sell online.
Conclusion:
The legalization and regulation of bitcoin and cryptocurrency in China is unclear as the Government has made no official statement. Some rules and regulations have come from Chinese authorities, but that does not show that they consider bitcoin legal in China. So, it can be said that the legality of bitcoin in China is unclear.
