China: If Bitcoin remains small, it will be allowed to live

On a trip to Saigon, where he is meeting an American businessman, Zhang Weiwu watches mesmerised as April 15th rolls over the Chinese Bitcoin scene – and nothing happens. He feels vindicated in his predictions and speculates further about how the situation will unfold. To help explain, he tells the old Chinese story of a servant who taunts his master with an empty jar; the tale of a nightclub that Disappears without being banned; and the episode of how a Bitcoin exchange threated the People’s Bank of China. Bitcoin’s future in China, he concludes, will be boring…

Roll the translucent membrane made from dried rice soup over a selection of strong-smelling vegetable leaves, which is itself rolled over a centre of beef. Dip the result into stinking salty fish sauce. That’s my Saigon cuisine. I ate like a king, smelling like a dead vegetarian fish. The odour is going to linger with me for days, but the salt was just what I needed to replenish the litres of sweat pouring from my body.

‘Normally I am a people person – I communicate with people, not with my phone,’ I guiltily told my Vietnamese hostess. ‘But a lot happened in the bitcoin world today.’

It was fun to compare the events of the day with my predictions:

Predicted 9th January. PBOC will not ban bitcoin but cripple its operation. Check.

Predicted 24th March: the PBOC order exists and was unintentionally revealed. Check.

Predicted 4th April: OKcoin will move to Hong Kong. Still waiting for that news.

Predicted 10th April: the bottom is in, don’t wait any longer. There will be no dip in price on 15th April.

So far 3 events took place as anticipated. One remains on the waiting list. The Picasso ATM web app was a surprise to me, but it was hardly a surprise to Ben, my American friend, who expected such thing to be delivered in the near future. There’s a culture gap, and my assumptions didn’t work perfectly for a western mind like Bobby Lee’s.

The next episode of China’s Bitcoin Show will be rather boring. Please look away now. A warning to my patient readers who are still with me: I am going to start with some childhood stories!

A capable lord drinks wine from empty jar

I expect current events to follow a pattern we have seen so many times before in China. And this pattern is better told as two stories. The first story is an old one. All Chinese children knows it:

‘The lord sends his servant to buy wine, but does not give him any money. “A truly capable servant,” he says, “can buy wine without money.” The servant returns with an empty jar. “A truly capable lord,” he says, “drinks wine from an empty jar.”’

The joke stops there. It is like western news reports of China: saying what occurred, but not what really happened. But it’s all there, and a wise Chinese person can divine the untold as if it was clearly presented in the story:

1. The lord has likely felt his servant has been disobedient to him, or offended him in some way, before this story begins. He sets the challenge, so that an obedient servant will have to show his inferiority by admitting, ‘Lord, I cannot deliver, I have failed you and I throw myself on your mercy.’ At this point he either receives punishment for his offence, or is pardoned.

2. To his master’s surprise, the wily servant has already found a new employer, or perhaps struck lucky in a game of Pao Gow (which could be the reason he offended his lord in the first place). He takes the opportunity to mock his lord before he is sacked.

So, the real beginning of the story (the lord’s feelings of grievance to his servant) and the real end of the story (the lord sacking the servant), have been left out. We can assume that something has been left out of our ‘objective new reporting’, too.

Now what is unusual about this in the bitcoin world is that PBOC did not give the servants an audience. Usually, for such a matter, the lord would give a ‘warning’ to his servants a few days before he asks for his wine. Just a wink is enough: the servant is expected to understand the message and avoid losing face. Now, PBOC did not give any exchange so much as a wink, let alone an audience, and this means it wants them out of the picture. ‘You’re free to trade bitcoin without using a bank, just like you can buy wine without any money.’ The servants know, too, that in this case showing obedience will not help. And so a rare thing has occurred: Huobi warned PBOC like, as the Chinese would say, an ant warns a tree, that forcing bitcoin into a black market will make it harder to manage – or, in other words, a capable lord drinks wine from empty jar. It provides a good laugh, but the servant is sacked anyway.

Nobody dies, conflict is resolved

The second story is a real one. I heard it when I was in high school and learned the harsh reality of life in China. It did not appear in the news.

A business man invested a nightclub. He bribed all the government officials, of course. But the officials miscalculated the revenue and assumed it would be higher than the reality, and thought the bribe was too small. The business man, after failing to prove the correct figures to them, decided to go on the business anyway – a bad move. In a typical Wild West movie, you would expect the officials to gun down the nightclub owner, spit on his dead body, and check his desk for money. It rarely happens that colourfully in China, at least in the last few years or so.

What really happened is the following: the police parked a car with flashing lights right in front of the nightclub. Nobody visited the club – not because the customers were criminals, but because the customers correctly interpreted the message, that the police were on bad terms with the nightclub and they may raid it and its guests, perhaps in search of evidence of prostitution. The club went bankrupt, the police learned that they really did make a mistake about the owner’s profits, removed their police car and waited for a new nightclub owner to repeat the game, perhaps with a reduced bribe this time.

So this is the Chinese way: nobody dies, conflict is resolved, cash is choked off, no blood is shed.

The Chinese government seems to have drawn wisdom from Mahatma Gandhi. Gandhi correctly predicted that if you make ruling very difficult to do, eventually the ruler will give up ruling. In China, if you (the government) makes business really difficult to conduct, eventually they will give up on their business. Real bloodshed is not necessary. In fact, the Chinese have learned it even better than that. In China, putting someone out of business is unnecessary. If you remain weak and insignificant, you are often allowed to live, and they will cease fighting. It is called ‘harmony’, and it is the recent political zeitgeist. Don’t kill the peasants who lost their land to the government: you only need to make it very difficult for them to live. Don’t close Wal-Mart, just make it so weak that it can’t compete with HuaRuen. I once hoped China would use this ‘harmony’ policy to deal with North Korea, but that hope is fading – the need to take a different stance from the US wins over the need to ‘harmonise’ North Korea.

So, what is in the next episode of Bitcoin China Show? If bitcoin grows strong in China, or regains its strength, a new policy will be announced to suppress it. If it remains small, it will be allowed to live. Perhaps, like a miscalculation of revenue, hitting the exchanges is a mistake too – exchanges didn’t push the price, people did.  But it doesn’t matter

 

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The author is a Chinese entrepreneur. He has been doing IT business with German customers in China for 10 years. He believes bitcoin is the greatest invention in this decade, and is actively looking for opportunities and partners to establish new types of business with bitcoin. He can be reached via linkedin

Read more from Zhang: It’s not a survivor’s game, it’s a looser’s game and Truth and Rumor