Digital Dollar Strategy Rise of China Payment Networks and Digital Currencies. China’s emerging payment networks, together with its new digital currency, pose a greater long-term threat to U.S. national security interests globally than 5G, AI, or semiconductors, combined. If the United States acts now, it can counter China’s expansionary efforts to control emerging market money flows, and ultimately, global monetary flows. Policy and strategy recommendations are provided. In 2020, China also launched the world’s first Central Bank Digital Currency (CBDC) based on the renminbi (a “digital yuan”). China began research on its digital yuan in 2014.9 Although this effort is targeted at the M010 money supply, given its digital nature, it can eventually grow into M111 money supplies. Both Alipay and TenPay will support China’s digital yuan, making the renminbi the primary currency underpinning these Chinese-controlled payment networks.12 A digital yuan by itself would likely be confined to China, but together on growing payment networks outside of China, is a far greater threat to the U.S. dollar as the reserve currency. U.S. policy and strategy recommendations: 1) Consider placing Tencent (TenPay and WeChat Pay) and Ant Group (Alipay) on the Entities List, requiring a license for any current or future U.S. technologies, particularly before Ant Group’s impending IPO, 2) BlockdownloadsofAlipayandWeChatPayintheUnitedStates(after careful interagency deliberations). The highly personal information that is required to be stored in Alipay and TenPay (WeChat Pay), makes TikTok look like child’s play 3)TheUnitedStatesshouldleadaconsortiumoftechnologypartnerstofasttrack the development of a better, more compelling alternative digital currency and payment network platform for developing economy central banks.

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SEPTEMBER 2020
The Rise of China Payment
Networks and Digital Currencies
BLUF: (SBU) China’s emerging payment networks, together with its new
digital currency, pose a greater long-term threat to U.S. national
security interests globally than 5G, AI, or semiconductors,
combined. If the United States acts now, it can counter China’s
expansionary efforts to control emerging market money flows,
and ultimately, global monetary flows. Policy and strategy
recommendations are provided.
FROM
Paul C. M. Touw, Science Fellow and Chief Strategy Officer
CONTRIBUTORS AND SUPPORTING AUTHORS
Mung Chang, Science and Technology Adviser to the Secretary
Edward P. Kinsey, II, Senior Advisor, Chief Financial Strategy Officer
James Shinn, Senior Advisor, Economic Growth, Energy and the Environment
U.S. Department of State
Under Secretary Keith Krach
Office of Economic Growth, Energy, and the Environment

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Executive Summary
(SBU) Over the next decade, digital forms of money will transform global economies.
More of the necessary goods and services consumers require are only available online,
from Amazon to airline tickets, to ridesharing, and food delivery. Smartphones are now
more ubiquitous than bank accounts or consumers with credit (to obtain credit cards) in
developing economies and in the United States. Digital forms of money and the eventual
extinction of paper currency are inevitable.
(SBU) A decade ago, a similar transformation in telecom networks was also unfolding.
Before 2009, China’s Huawei and ZTE telecom equipment providers were mostly
confined to China. Huawei won its first international telecom deployment outside of
China in 2009. China’s CCP would then fuel Huawei’s global rise in advanced 5G
networks to become the world’s top telecom vendor with US$75 billion in tax breaks,
financing, and cheap resources.1 Huawei now has US$122 billion in revenues, more than
twice the revenues of Cisco Systems, and operations in nearly 170 countries.2
(SBU) Today, a potentially more serious technology race is unfolding with significant
implications to U.S. national security interest globally: the race to control advanced
payment networks and digital currencies. Moving data (often encrypted) over China-
controlled 5G digital networks is one set of security concerns. Moving money of entire
economies over China-controlled digital payment networks, where personal information
(name, locations, bank accounts, SSN, address, phone number, usernames and
passwords) is required to be stored within these networks, is quite another. Alipay and
TenPay make TikTok look like child’s play. To underestimate China's global rise in
digital currencies and payment networks today, is synonymous to ignoring Huawei’s
improbable rise in 2010.
(SBU) China’s Ant Group (“Alipay”) and Tencent Holdings Ltd. (“TenPay,” also known
as “WeChat Pay”) payment networks, have already surpassed the global transaction
volumes of Visa, Mastercard, and American Express (combined)—in just five years.3 In
under a decade, these Chinese payment platforms now transact over US$41 trillion per
year, dwarfing comparable U.S. fintech payment platforms such as PayPal (at mere
US$712 billion). In addition, the fee taken from merchants for these Chinese payment
networks is very low compared to fees set by international banks from western payment
1
Wall Street journal, December 25, 2019, “State Support Helped Fuel Huawei’s Global Rise,”
https://www.wsj.com/articles/state-support-helped-fuel-huaweis-global-rise-11577280736
2
Huawei, 2019, https://en.wikipedia.org/wiki/Huawei
3
Transaction volumes and comparisons discussed in more detailed later in this report.

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networks, for credit or debit cards. Transaction fees to merchants for Alipay and TenPay
are 0.55% to 0.60%, versus 1.5% to 3.5% for comparable payment networks from Visa,
Mastercard, American Express, PayPal, Venmo, Apple Pay, or Google Pay.4 It is
important to note the U.S. economy spends twice as much on payment fees ($470
billion) than it does on all wireless telecom services ($190 billion).5 Like lower cost 5G
from Huawei, lower payment fees are an enormous inducement for a country or
economy to switch to lower cost Chinese payment networks. Chinese digital payment
networks are also cheaper than the cost to manage physical cash (typically 1%). Antpay
and TenPay are not only cheaper than any other form of payment; they are faster
(instant), more secure, and more convenient to use.
(SBU) Ant Group is executing the world’s largest IPO in 2020, expected to exceed Saudi
Aramco’s record breaking IPO in 2019, raising an expected US$35 billion war chest.6
Ant Group and Tencent will aggressively expand their fintech and payment networks in
Africa, Latin America, and the Indo-Pacific region, currently comprising 62% of the
world’s population.7 Ant Group, for example, has already made investments or acquired
fourteen (14) fintech companies in thirteen (13) countries8 outside of China including
major investments in India’s Paytm.
(SBU) In 2020, China also launched the world’s first Central Bank Digital Currency
(CBDC) based on the renminbi (a “digital yuan”). China began research on its digital
yuan in 2014.9 Although this effort is targeted at the M010 money supply, given its digital
nature, it can eventually grow into M111 money supplies. Both Alipay and TenPay will
support China’s digital yuan, making the renminbi the primary currency underpinning
these Chinese-controlled payment networks.12 A digital yuan by itself would likely be
4
MindStudios, 2018, “China Payment Systems Guide: Alipay vs WeChat Pay vs UnionPay,”
https://themindstudios.com/blog/china-payment-systems-guide/
5
According to McKinsey & Company, the U.S. economy spends $470 billion per year on payment fees, statista
estimates that the entire service revenues of the wireless industry are less than $200 billion.
6
Bloomberg, September 20, 2020, “Jack Ma’s Ant to Lift IPO Funding Target to $35 Billion,”
https://www.bloomberg.com/news/articles/2020-09-21/jack-ma-s-ant-is-said-to-lift-ipo-funding-target-to-35-
billion
7
World Bank population estimates, 2019.
8
Pitchbook media mentions, Rabbit Capital
9
Ledger Insights, 2019, “China is ready for central bank digital currency issuance. Here’s the plan,”
https://www.ledgerinsights.com/china-ready-central-bank-digital-currency-cbdc/
10
M0 money refers to the most liquid form of money, or cash.
11
M1 money supply includes m0 plus, bank deposits, checks, traveler’s checks, and other checkable deposits.
12
Forbes, May 24, 2020, “China’s Central Bank Digital Currency Will Strengthen Alipay and WeChat Pay, Not
Replace Them,” https://www.forbes.com/sites/zennonkapron/2020/05/24/chinas-central-bank-digital-currency-
will-strengthen-alipay-and-wechat-pay-not-replace-them/#5709d0f56b69

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confined to China, but together on growing payment networks outside of China, is a far
greater threat to the U.S. dollar as the reserve currency.
(SBU) Thus far, the United States does not have a strategy or policies to counter China’s
advances in payment networks and expansion in Africa, Latin America, or the Indo-
Pacific. America can and must act now while it retains a global competitive advantage in
reserve currencies, supporting technologies, and international monetary flows.
(SBU) Foreign central banks have a unique and foremost interest in controlling their
currencies and payment networks within their economies. They also control the laws,
licensing, and monetary policies regarding payments and money in their countries.
However, they lack access to technology solutions to deploy digital currencies, payment
networks, consumer e-wallets, or merchant point-of-sale (POS) systems—where U.S.
technology companies lead, including the world’s top cloud computing platforms,
sophisticated transactional databases, the world’s largest social media platforms, and 99
percent13 of the worldwide smartphone OS market.14
(SBU) Initial U.S. policy and strategy recommendations:
1) Consider placing Tencent (TenPay and WeChat Pay) and Ant Group (Alipay) on
the Entities List, requiring a license for any current or future U.S. technologies,
particularly before Ant Group’s impending IPO,
2) Block downloads of Alipay and WeChat Pay in the United States (after careful
interagency deliberations). The highly personal information that is required to be
stored in Alipay and TenPay (WeChat Pay), makes TikTok look like child’s play,
3) The United States should lead a consortium of technology partners to fast track
the development of a better, more compelling alternative digital currency and
payment network platform for developing economy central banks.
(SBU) We believe the right set of U.S. technology partners15 would be highly motivated
to participate in a consortium effort to provide these technologies and a central bank
digital currency platform to foreign central banks—and are extremely well positioned to
do so—if greenlighted by the United States Government. An open architecture,
13
Of the worldwide smartphone operating systems (OS) market in July 2020, Google Android makes up 74.6% and
Apple iOS makes up 24.82%, per the footnote below.
14
Statista, May 2020, “Mobile operating systems’ market share worldwide from January 2012 to July 2020,”
https://www.statista.com/statistics/272698/global-market-share-held-by-mobile-operating-systems-since-2009/
15
Technology partners that may include Apple (Apple Pay and iOS), Google (Google Pay and Android), Facebook (to
include Libra), Microsoft, Amazon, and IBM (as Cloud providers) and other potential technology partners to be
determined.

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configurable, central bank digital currency platform for foreign central banks, with
international currency clearing mechanisms, universal and international point-of-sale
(POS) standards, and integrations into mobile e-wallets is proposed.

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Section 1:
In 5G, AI, and Chips, the U.S. and its Allies are Leading
Despite the hysteria, the United States and its western allies are leading in
the 5G, AI, and semiconductor races versus China, in part due to the high
awareness guiding U.S. and western policy in these sectors
The growth of China's 5G telecom giants ZTE and Huawei caught the United States by
surprise. Huawei first entered the international 3G and 4G market in 2009 and, within a
decade, would become the world's largest telecom provider, with US$122 billion in
revenues and operations in nearly 170 countries.16 With China’s national intelligence
civil-military fusion laws, in 2018, U.S. policy officials began highlighting the risks that
ZTE and Huawei’s next-generation 5G networks posed to data flows, and their potential
use by the Chinese government for espionage.
In 2019, the U.S. began successfully implemented countermeasures and sanctions to
stem Huawei 4G and 5G deployments in the United States and with allies. By mid-2020,
the list of countries considering bans or banning Huawei or ZTE outright include the
United States, Japan, the UK, India, Australia, New Zealand, Canada, Germany, France,
and Sweden, along with other major telecom operators. In August 2020, the United
States enacted new sanctions cutting off Huawei’s access to vital, advanced computer
chips. Thus, although more work remains, risks associated with ZTE and Huawei have
been significantly mitigated, particular of espionage in the United States, which has
been effectively blocked.
16
Huawei, 2019, https://en.wikipedia.org/wiki/Huawei

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Which countries have banned Huawei?
Is China losing in 5G? In 2019/20, Europe beat China by a nearly 2-1 margin
in 5G equipment wins17
17
5G LightReading, Feb. 24, 2020, “Ericsson, Huawei & Nokia’s 5G ‘wins” are no big deal,”
https://www.lightreading.com/5g/ericsson-huawei-and-nokias-5g-wins-are-no-big-deal/a/d-id/757677

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Artificial Intelligence (AI) and semiconductors pose other cyber-security, competitive,
and commercial risks. However, although China and the U.S. are both heavily investing
in AI research and development (R&D), the U.S. still holds a lead in the
commercialization of AI.18 The United States is also responding to the AI challenge by
investing heavily in AI and currently at a great rate than China. AI investments are
nearly doubling in the U.S. each year and hit US$16.5 billion in 2019.19
Furthermore, new estimates from the Center for Security and Emerging Technology
(CSET) show that the U.S. may be outspending China in AI R&D overall, and “favor the
United States.” CSET further estimates that, “we assess with low to moderate confidence
that China’s public investment in AI R&D was on the order of a few billion dollars in
2018. With higher confidence, we assess that China’s government is not investing tens of
billions of dollars annually in AI R&D, as some have suggested.”20 Other sources suggest
North America is estimated to be investing 55% of the world’s AI R&D spend, versus the
rest-of-world (including China and Europe) at 45% (see chart below).
Global venture capital investments in AI21
• North America leading the way at 55% market share
18
Kai-Fu Lee, 2018, “AI Super-Powers, China, Silicon Valley, and the New World Order”
19
Artificial intelligence (AI) funding investment in the United States from 2011 to 2019, 2020, statista,
https://www.statista.com/statistics/672712/ai-funding-united-states/
20
Center for Security and Emerging Technology (CSET), December 2019, “Chinese Public AI R&D Spending:
Provisional Findings”
21
Pitchbook, 2019, stateof.ai

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Western allies also hold a lead over China in semiconductor design, development, and
advanced node fabrication, where China is still a majority consumer of foreign and U.S.
semiconductors.22 Chinese foundries lack leading-edge technologies because of long-
standing export controls dating back to 199623 due to the Wassenaar Arrangement
involving 42 participating states, which excluded China.24 China’s best foundries make
chips at 14 nanometers while the leading edge is 7 nanometers. Chinese manufacturers
are therefore two generations behind the industries top performers. As a result, China
imports the vast majority of its semiconductors.
China’s semiconductor sales versus purchases25
• China is a net consumer of chips, by a large margin
Thus, America’s countermeasures to China’s 5G initiatives, and its lead in AI and
semiconductors has helped to significantly mitigate the risk and threats to U.S. national
security from these sectors. In fact, European 5G telecom equipment manufacturers
22
McKinsey&Company, 2018, “McKinsey on Semiconductors,”
https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/semiconductors/pdfs/mosc_1_revised.ash
x
23
McKinsey & Company, “McKinsey on Semiconductors,”
https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/semiconductors/pdfs/mosc_1_revised.ash
x
24
Wikipedia, 2020, “Wassenaar Arrangement,” https://en.wikipedia.org/wiki/Wassenaar_Arrangement
25
ATLAS, Data: Stanford C. Bernstein

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beat China in 5G wins by nearly a 2-1 margin in 2019-20. That is not to suggest these
risks have been completely mitigated, or that there is not more that the United States
must do—but the U.S. has active policy and strategy initiatives in place for 5G, AI, and
semiconductors—and, in most cases, the United States and western allies have the edge
or are winning in 5G, AI, and semiconductors.
FOR OFFICIAL USE ONLY, PRE-DECISIONAL, DELIBERATIVE 17
Select U.S. actions to counter China
5G, Semiconductors, AI
5G Semiconductors AI Payment Networks
• Banned Huawei, ZTE in
the United States
• Sanctioned Huawei,
ZTE
• Export controls on
semiconductor
equipment and
technology to Huawei
• International effort to
block Huawei in foreign
countries, Japan,
Australia, part of
Europe
• 1996 Wassenaar
Arrangement, excluding
China
• 2020 Chips Act, $10
Billion, passed by
Congress, signed by
President
• Numerous Export
Controls on
semiconductor
equipment to China
• DoD, NSF invest
billions in AI
• Republicans propose
$100 billion Endless
Frontier Act, including
investments in AI
• Democrats propose
$350 billion bill to
counter China,
including investments
in AI
?
• EO blocking
downloads, halted by
courts

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Section 2:
In Payment Networks, China is The Tiger,
and the Threat is Greater
The Golden Rule: “He who controls the gold, rules.”
China’s payment networks are bigger, better, and spreading faster, while
China leads in a digital currency, with almost no response from U.S.
policy makers—the combination poses a great threat to U.S. national
security interest at home and abroad. Here’s why.
The advancement of Chinese digital payment networks and the introduction of the
world's first Central Bank Digital Currency (CBDC) based on the renminbi (“digital
yuan”) pose an entirely new set of risks and threats over the coming decade. These
emerging risks remain largely unchallenged by a western response or western
alternatives. As a result, at present, China’s emerging digital currency and payment
networks pose a greater long-term threat than 5G, AI, or semiconductors, combined; in
large part, due to the lack of a response or the awareness of the risks and threats posed
to U.S. national security interesting by these emerging Chinese fintech networks.
Payment networks from Chinese Alipay and TenPay are faster, more efficient, and
increasingly more ubiquitous in China and South-East Asia—and poised for explosive
growth in developing economies where there are fewer electronic payment alternatives.
By comparison, U.S. payment networks such as Visa, Mastercard, American Express,
and PayPal have been blocked from the Chinese markets until 2019, and only given
licenses to operate in China (though a joint-venture investment) after Alipay and
TenPay dominated the Chinese payments markets.
Chinese fintech firm Ant Group (which owns Alipay) is expected to raise $35 billion in
the world’s largest IPO this year, exceeding Saudi Aramco’s IPO in 2019. Ant Group is
expected to aggressively expand its payment platform footprint from its current foothold

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in China, to North America,26 Latin America, Europe, the U.S., Africa, and South-East
Asia. Ant Group has already made investments or acquired fourteen (14) Fintech
companies in thirteen (13) countries27 including major investments in India’s Paytm.
With Ant Group’s expected new war chest of $35 billion from its 2020 IPO, Ant Group is
planning significant expansions of its fintech micro-loan and payment networks in
Africa, Latin America, India, and South-East Asia. Both Ant Group’s Alipay and
Tencent’s TenPay payment networks are expected to become a conduit for China's
CBDC digital yuan, its Belt and Road Initiatives, and ultimately attempt to challenge
U.S. dollar hegemony as the world’s reserve currency, particularly in the developing
world.
China and the developing economies targeted by Chinese payment networks are
currently 62% of the world’s population28 and expected to be 40% of global GDP by
2030, as compared to 15% contributed by the United States.29 Should China gain a
foothold in digital payment networks and its CBDC digital yuan, it will control global
payments and the flow of money through Chinese servers that are nearly three times the
size of the United States economy, and more than ten times the size of its population.
Espionage and securing data flows over 5G networks are one set of security risks.
Potentially controlling developing economies through the flow and hegemony of money
is quite another. To underestimate China's emerging rise in digital currencies ignores
the history of Huawei's improbable rise in 5G telecom networks. However, China's
digital payment networks and digital yuan are still primarily confined to the Chinese
economy. The time for the United States to act with new digital currency technologies is
now, while the U.S. is still the dominate world reserve currency and retains a lead in
26
PYMNTS.com, February 18, 2019, “Why North American Merchants Are Adopting Alipay In-Store (And Online),”
https://www.pymnts.com/news/retail/2019/alipay-in-store-online-digital-mobile-payments/
27
Pitchbook media mentions, Rabbit Capital
28
World Bank population estimates, 2019.
29
Martin Jacques, “When China Rules the World, the End of the Western World and the Rise of a New Global
Order”

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other enabling technologies such as smartphone operating systems (or “e-wallets”
devices).
Market Share of Mobile vs Non-Mobile Payments in China
Second Title
This report will explore how the State Department and United States Government can
work with a consortium of technology partners to provide a better, more compelling set
of alternative digital currency solutions for developing economy central banks to adopt
their own digital currencies and payments platforms. The U.S. still retains enormous
advantages as the world’s reserve currency and with the dominate smart phone
operating systems and payments e-wallets (Apple Pay, Google Pay, and Facebook’s
Lybra initiatives, etc.). An open architecture, configurable, central bank digital currency
platform, with direct currency clearing mechanisms, universal point-of-sale (POS)

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Appendix
Chinese 5G, AI, and semiconductors are a threat, although increasingly
mitigated and contained by western countermeasures and alternatives
In the last two years, the United States government has placed significant focus on the
potential threat posed by China’s rise in 5G telecom networks from Huawei.
Policymakers and intelligence officials have highlighted the potential risks that the
telecommunications giant could be exploited by the Chinese government for espionage.
In 2019, the United States issued countermeasures effectively blacklisting Huawei.
Similar espionage arguments can be made for the rise in Artificial Intelligence
technologies and the use of Chinese semiconductors in transmitting or storing data.
These technologies too can be used for espionage, hacking, data piracy, or IP theft.
However, the United States does have counter measures including the use of encryption
and better cyber security. Probably the greatest risk to the United States and its allies is
that many public and private sectors entities simply do not employ cyber security more
effectively.
Furthermore, the AI race is still new, and America and its allies have stepped up their
innovation in AI and still largely lead in the development of advanced semiconductors.
The rise in Chinese digital currencies and payment platforms is a far
greater threat, and remains largely unchecked
While the United States innovation in payments over the last decade has largely
involved the addition of a security chip in plastic payment cards, the rise and innovation
in Chinese payments systems has been swift and profound. In less than a decade, over
90% of China’s consumer transactions now occur online or via mobile phones. Two
FinTech juggernauts dominate China’s mobile payments market, Alipay and WeChat
Pay (also known as “Tenpay”). Chinese digital payment platforms also now surpass
worldwide consumer transaction volumes of Visa and Mastercard. In 2020, after 6 years

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in development, China introduced the world’s first Central Bank Digital Currency
(CBDC). The United States has only began considering a CBDC in 2020.
To underestimate China’s emerging rise in digital currencies and
payments, is to ignore the history of Huawei’s improbable rise in 5G
A decade ago, in 2009, the Swedish phone giant Teliasonera set out to build one of the
world’s first 4G networks. Teliasonera made an unexpected choice: Huawei, a Chinese
company with little presence outside China.30 Since then, Huawei has become the
world’s largest telecom equipment company, with revenues of $107 billion.
Chinese innovation in currencies cannot be ignored. China invented paper currency
nearly 1,400 years ago, in 618 A.D. But more importantly, in just the last five years,
China has rendered its own paper invention nearly extinct on mainland China. And the
efficiency of China’s payment systems vastly exceeds U.S. payments systems. Alipay
payments are free under US$294, and they charge a service fee of 0.1% on payments
over 2,000 yuan. By comparison, PayPal, Visa, and Mastercard charge on average
2.98%, or nearly 30 times more. To put this in perspective, the U.S. Federal Corporate
Tax brings in US$209 billion to the Treasury. The cost of moving money to the U.S.
economy, in counting paper, moving paper, ATM fees, payment and credit card fees is
nearly [2.2x] more, at US$470 billion [add references]. The entire bill for energy to the
U.S. economy is just 2.4x more than the cost of moving money, at US$1.14 trillion. If
efficient energy is a critical competitive advantage to the U.S. economy, than surely
efficient payments are too. China has the advantage with a payments infrastructure that
is 30 times less expensive to its economy than the U.S. payments system is to its own
economy.
The United States has focused on 5G, but the control and flow of money
and commerce worldwide is a vastly greater threat
30
Foreign Policy, “The Improbable Rise of Huawei,” April 3, 2019, https://foreignpolicy.com/2019/04/03/the-
improbable-rise-of-huawei-5g-global-network-china/

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China is deploying a Central Bank Digital Currency with the eventual goal
of supporting its One Belt, One Road policy, to challenge U.S. reserve
currency hegemony
In 2020, China began testing its own Central Bank Digital Currency (CBDC). This RMB
CBDC will eventually be distributed through Alipay, Tenpay, and through Chinese and
international banks. The goal of these efforts is best summed up by China’s Zero One
Think Tank: “The fundamental purpose of CBDC is to promote the internationalization
of the RMB, especially in the “One Belt, One Road” policy environment, to improve the
convenience of RMB cross-border payment, and to enhance the RMB as a tool for
international trade pricing and payment settlement, and to enhance the status of the
RMB as a value storage and reserve currency.”31
Alipay and Tenpay are aggressively expanding abroad, China’s CBDC will
follow, in highly populated developing countries
Alipay is an online and mobile payment platform based in Pudong, Shanghai, China. Its
parent company is Ant Financial Service Group based in Hangzhou, China. Ant
Financial raised a record US$14 billion at a valuation of US$150 billion in 2018.32
WeChat Pay (also known as Tenpay) is a similar online and mobile payment platform
within WeChat, a social media company, developed by Tencent Holdings, Ltd based in
the Nanshan District, Shenzhem, China. Tencent has a market capitalization of US$622
billion.33
Alipay and WeChat Pay dwarf U.S. mobile payments, surpass Visa and
Mastercard volume worldwide
31
Ledger Insights, “How China’s Central Bank Digital Currency will help Renminbi to Challenge the Dollar,”
https://www.ledgerinsights.com/china-central-bank-digital-currency-cbdc-renminbi-dollar/
32
“Ant Fianncial raises $14 billion I world’s largest-ever single fundraising,” Reuters, June 7, 2018,
https://www.reuters.com/article/us-ant-financial-fundraising/ant-financial-raises-14-billion-in-worlds-largest-ever-
single-fundraising-idUSKCN1J407Y
33
Yahoo Finance, August 17, 2020.

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WeChat has over 1.15 billion users globally; Alipay has over 1.3 billion. Alipay and
WeChat together control over 90% of payments in China, both contributing to consumer
mobile payments in China has grown 28-fold since 2015. China’s mobile payments
transaction volume hit US$41.51 trillion in 2019, dwarfing PayPal (at US$712 billion in
payments in 2019) and U.S. mobile payments volume overall (at a mere US$64 billion
in 2018). WeChat Pay and Alipay have also surpassed worldwide payments volume of
Visa and Mastercard (at US$28.3 trillion in 2018). Mobile payments benefit from
greater ease of use, better security, the ability to buy things with only QR codes, and no
additional need to carry a wallet, cash, or a myriad of credit and debit cards.
A digital silk road expands China’s belt and road initiatives
While the U.S. primary payment innovation over the last decade has been the addition
of a chip to credit cards, China Fintech industry has flourished in more advanced digital
payments. China payments environment benefits from fewer regulatory hurdles versus a
labyrinth of U.S. State and Federal regulations that have crippled payments innovation
in the United States. These regulations include separate money-transmitter regulations
and laws in all 50 States, a process that can take up to two years and cost millions of
dollars for a new FinTech company to complete.