Opin-yuan Piece: The digital Yuan can end poverty in China
Every nation has the categories of filthy rich and the dirt poor. China, with a population of nearly 1.4B, currently has only around 1.15% of its population, mostly in rural areas, living below the poverty line as compared to the US where the demographic makes up almost 10%.
Since 1980, China has developed and launched thirteen 5-year plans for economic and social development for the betterment of their society. Their 13th, and most current plan, was launched in 2016 with a target to bridge the welfare gap to eradicate poverty completely by 2020. It was a bold goal and as we can see from the very low percentage above, they almost accomplished it. To give credit where credit is due, more than 800 million people have been lifted out of poverty since the Republic of China was established. But with the government now making changes to how they run the economy and giving their blessing to a digital currency, how will they implement this to help the 16 million citizens who still need aid but might not necessarily have the means to receive it?
The simplest answer, but not the most feasible, would be to give every family and working citizen who is below the poverty line a cell phone. With just a phone, even with no internet access, they can make use of the digital wallet for the digital Yaun. But for arguments sake, let’s say that the government employs this and now, voila, every family has a phone. The benefit to this for the families, they now have a phone and a direct way to pay for goods, receive money for goods and services, easy transfers of funds to and from family and the government. The benefit to the government is to see what their citizen are buying and producing so they can gather data and be able to send the correct relief to every citizen living under the poverty line. In a near perfect world, in order to end poverty, this seems like the perfect solution for both parties, the people get phones, the government gets data on all of its citizens and uses it for the right reasons.
Back to reality, China’s rural areas have been a focus of the government for a while but somehow improvements have been the hardest to make. A large part of the rural population is made up of farmers since the regions are used for agriculture. Farmers cannot legally own land, whatever cashflow they incur from selling their goods is eaten up in tax money to the government or in expenditures for their households. The easiest way for a farmer to earn money now, is if they send a family member into the city to work. In the perfect scenario written above, where each poverty-stricken citizen is gifted with a phone, the digital Yuan would be the easiest way for each new city-dweller to send money to their families ensuring that, in addition to government aid, every citizen can live with a bit more comfort, in turn, reducing the poverty percentage to zero.