Li Wenlong: Building a financially strong country also requires building a digitally strong financial country

The “14th Five-Year Plan” proposed accelerating the development of a strong financial nation, vigorously advancing technological finance, green finance, inclusive finance, pension finance, and digital finance, especially mentioning “digital finance.” This represents a significant upgrade and breakthrough compared to the “14th Five-Year Plan,” which outlined building a modernized powerful country across eleven sectors: “culture, education, talent, sports, science and technology, manufacturing, quality, internet, transportation, trade, and ocean”—but did not mention “financial power.”

In fact, from the perspective of the global economic division system, building a strong financial nation holds extremely important top-level value and strategic guiding significance. Moreover, in the context of the world accelerating toward a digital economy, it is even more necessary to focus on building a “digital financial power.” This is key for China to gain a leading advantage in the current and future global digital economy development.

1. Finance is the apex of the economic division pyramid, determining whether China’s nation can truly rise.

From a global industrial perspective, in the traditional economic division pyramid, agriculture and resource industries are at the bottom, with manufacturing in the middle. Since the financial industry provides the financing, payment channels, and payment methods for global economic activities, and determines the carriers and forms of wealth—being the critical sector of the economy—it sits at the top of the global economic pyramid.

Looking at global national economic divisions, even though the manufacturing sectors of the UK and the US have been shrinking and their influence limited, they remain at the top of the pyramid because the Anglo-Saxon and Jewish financial elites control the global financial system. This gives the UK and US the greatest influence worldwide, allowing them to wield finance as a tool for control and deterrence. Relatively, although Germany and Japan have strong manufacturing industries, they have never been able to reach the top-tier financial advantage of the US and UK.

Currently, China is a major global manufacturing power, but its position in international finance remains significantly weak. International financial payments and payment tools are controlled by Europe and the US, preventing China from reaching the top of the global economic pyramid. This will be a long-term pressure and challenge for China’s rise. Therefore, while building a manufacturing powerhouse is extremely important, if China becomes complacent with just being a global manufacturing giant or stops there, it may only develop into a “big Germany” or a “big Japan,” potentially blocking China’s path to becoming a true global financial power and hindering its development into a top-tier nation.

2. The world is accelerating toward a digital economy, and the explosion of digital finance based on data elements and digital assets is an inevitable trend.

Currently, the global shift from traditional to digital economy is irreversible and widely recognized as the main development trend. In the digital economy, digitalization generates vast amounts of data elements and data resources, which have become core assets of the digital economy—on par with traditional real estate, movable property, and financial assets. The rapid emergence and accumulation of digital assets, which participate in economic activities at a faster pace than traditional assets, will lead to increasingly active and explosive digital financial activities. Under compliant and regulated conditions, blockchain technology can link real industries with digital financial activities, characterized by high credibility, liquidity, tradability, and traceability, making them likely to become the main financial expression of the global digital economy.

3. Digital finance plays a core role in the digital economy.

In the traditional economic division pyramid, agriculture and resource industries are at the bottom, manufacturing in the middle, and finance at the apex. Correspondingly, in the digital economy division pyramid, digital agriculture and digital manufacturing occupy the middle to lower levels, while digital finance undoubtedly sits at the top of the digital economic pyramid. Therefore, besides focusing on other digital industries, it is crucial to recognize and highly value the strategic position and top-tier advantage of digital finance within the digital economy. This is essential for China to achieve its core goal of building a modernized powerful country.

4. Building a strong digital financial nation is crucial for China to truly rise in the global digital economy.

Currently, China leads in foundational areas of the global digital economy, especially in social governance and manufacturing, but remains relatively weak in digital finance. Particularly, the international influence and application of digital renminbi are still in early stages, and compliant digital financial applications supported by blockchain technology are just beginning. Fortunately, in the current global digital economy division pyramid, the layout of digital finance has not yet been fully shaped, providing China with significant opportunities.

At the same time, it is necessary to remain vigilant as the US has accelerated its layout to dominate the top of the digital economy pyramid and establish global leadership in digital finance. Given this situation, China should aim to build a digital financial powerhouse as its core goal of becoming a strong financial nation. This is vital for the Chinese nation to truly achieve a rise in the global digital economy.

(Author: President of Zhejiang Zhijiang Digital Economy Innovation Research Institute)

(Source: Yicai Global)