Best Bitcoin Exchange for China
The Chinese raised Bitcoin. But now the crypto currency is a thorn in the side’s side’s side. It tries to curb speculation with ever new regulations – with only moderate success.
For years, only technology insiders were interested in Bitcoin. This changed abruptly about two years ago when Chinese investors discovered the most famous crypto currency for themselves. Many Chinese do not trust domestic monetary policy; they consider China’s capital controls to be too rigid. Word spread quickly that the purchase of Bitcoin offered an opportunity to hide assets from state financial supervision. The Bitcoin price jumped upwards.
Meanwhile, the value of a Bitcoin is over 18,000 US dollars. Cryptofever has long since spread all over the world. It is assumed, however, that between 50 and 70 percent of Bitcoin’s trade is conducted among East Asians; the Chinese are the main participants. In the former pioneer country of all places, however, the Bitcoin fever could soon be over again.
Transaction consumes a lot of electricity
In September, the government banned all trading places in the country for the new currencies. As a result, China’s third-largest IT company, Baidu, was forced to withdraw from Bitcoin as a payment option for its services. Other providers followed suit. Now the Bitcoin system in China is facing another blow. So-called miners (derived from miners), who provide the computing power of extremely powerful computers to the Bitcoin system and are rewarded with newly created Bitcoins, are now to turn off the power in China.
Bitcoin is a purely digital currency. It gets by without central banks and banks. The calculation of account balances is considered to be extremely secure. This has only been made possible by new methods of information technology. At the heart of the system is the so-called blockchain, a public database that effectively protects against manipulation.
However, an extremely large amount of electricity is required to “extract” Bitcoin. The tricky thing about this system is that the more computing power is available, i.e. the more people participate, the more difficult the mining becomes. An arms race for the most powerful processors begins – which demands even more power. A transaction currently consumes as much electricity as an average US household does in eight days. Most Bitcoin mines were built in China because of the low cost of electricity. The operators of such mines operated mainly in the vicinity of large hydroelectric power plants in the west and southwest of the country, where there are many dams, or in regions with a lot of coal mining, i.e. in central China. Most miners in these areas worked closely with local energy suppliers. It is suspected that they were heavily involved in the business. In mid-November, the state-owned energy utility State Grid Minern in the southwestern Chinese province of Sichuan ordered that the power of the miners be throttled. According to the letter, the supply of electricity to households has absolute priority over other business interests.
“The party is over”
Other regions are now following suit. “The party is over,” says Bobby Lee, head of the recently closed Bitcoin exchange BTCC. The Chinese leadership wants to be at the forefront of new technical inventions and was initially interested in crypto currencies. However, she sees a danger in the trade with Bitcoin, which has recently escalated from her point of view.
“Virtual currencies are an instrument of criminal activity,” declared the National Internet Finance Association of China in mid-December, a subdivision of the Chinese central bank, which in turn reports directly to the Chinese government.
Despite the recent restrictions – trading in coins is likely to continue in China. The official stock exchanges have closed the government down. Since then, trading with Bitcoin among users has boomed all the more. Service provider Local Bitcoin suspects that unofficial trading has increased by 2200 percent since September alone. Bitcoins are currently too attractive for the Chinese to keep their hands off.
Since 2010, the economy of the People’s Republic of China has been the second largest economy in the world after the USA, or in terms of purchasing power parity since 2016. In economic terms, the People’s Republic of China is highly dynamic and has developed into an economic and technological superpower as a result of a reform and opening policy that began in 1978.
The country has many mineral resources, especially coal, oil, natural gas and metallic ores. The People’s Republic of China is the world’s largest coal producer and the fourth largest oil producer. Coal reserves are the third largest in the world and oil reserves are estimated at around 24 billion barrels. China has 70 percent of the global reserves of rare earths and produces more than 95 percent of the world’s production of these raw materials. These metals are irreplaceable for many high-tech products manufactured in industrialized countries, such as mobile phones, hard disk drives, lasers, weapons systems or batteries for electric cars.
As a result of economic reforms, the economy of the People’s Republic of China has changed from a planned economy to an economic system that functions primarily according to market mechanisms. The Chinese government calls this economy, which is managed according to capitalist principles, “Chinese socialism. The dominant role of state capital has declined sharply since the late 1990s. In the past, China’s strength as a production location stemmed primarily from comparatively low wages. This is an advantage that has declined due to the sharp rise in wages in recent years.
China is no longer a low-wage country. In addition to natural resources, human resources are increasingly becoming the most important capital of the People’s Republic of China. Of the 800 million workers, 28.3 percent are employed in agriculture, 29.3 percent in industry and 42.4 percent in the service sector (as of 2016) Every year, between six and seven million university graduates with highly qualified degrees in technology and science enter the labor market. No other country currently invests more money in research and development than China.
Thus, the strengths of the Chinese economy lie in its advanced production know-how and supply chain management, which is increasingly making the country an economic innovation leader and a major player in global capitalism.
With a gross domestic product (GDP) of around 11,218 billion US dollars (as of 2016), the People’s Republic of China is the world’s second-largest economy. In terms of per capita gross domestic product, China is in the middle of the global rankings with around 8100 US dollars. In 2015, the Chinese economy grew by 6.9 %.
In the World Economic Forum’s Global Competitiveness Index 2017-18, China ranked 27th out of 137 countries in 2016, mainly due to its strong export economy. With an export volume of 2,098 billion US dollars in 2016, China was the world’s largest exporter of goods. Since China’s economic opening, the country’s exports have more than multiplied from 2 billion to over 2000 billion dollars.
The service sector generated 51.6 percent of GDP in 2016, the industrial sector 39.8 % and the agricultural sector 8.6 %. This made China the world’s largest industrial power, the largest agricultural producer and the second-largest consumer market. Of China’s 900 million workers, 28.3% were employed in agriculture, 29.3% in industry and 42.4% in services by 2015.
The major stock exchanges in China are the Shanghai Stock Exchange, Hong Kong Stock Exchange and the Shenzhen Stock Exchange. Cities such as Beijing, Shanghai and Shenzhen are financial centers of increasing international importance.
According to a study conducted by Credit Suisse in 2017, the People’s Republic of China ranked second worldwide in terms of total national assets. The total holdings of real estate, shares and cash amounted to 29 trillion US dollars, with Chinese households owning almost one tenth of the world’s assets of approximately 280 trillion US dollars. The average wealth per adult is $26,872 and the median is $6,689 (in Germany: $203,946 and $47,091, respectively). Chinese households are thus in the middle of the world’s per capita wealth rankings. Overall, 45.4% of the total assets of Chinese households were financial assets and 54.6% non-financial assets. The Gini coefficient for wealth distribution was 78.9 in 2017, indicating a very high wealth inequality. The top 10% of the Chinese population owned 71.9% of assets and the top 1% owned 47.0%. The share of Chinese with assets under $10,000 is estimated at 63.1% of the population and the share with assets over $1 million is estimated at 0.2%. A total of 1.9 million Chinese were thus millionaires, which means that the country accounted for about 5% of the world’s millionaires in US$. The People’s Republic of China was also the country with the second highest number of billionaires in the world with a total of 373. The richest man in the country was Ma Huateng with assets of 45.3 billion US dollars (as of 2018).