Reasons for China's Interest
There are numerous reasons China may be interested in developing a national digital currency. First, there are millions of Chinese citizens who lack easy access to standard bank services as a result of infrastructure issues throughout parts of the country. Beyond that, cross-border payments are typically charged heavily, and a digital currency could help to alleviate some of the fees for Chinese citizens. Even more broadly, it's possible that a national cryptocurrency would help to strengthen the dominant Communist Party of China (CPC). Blockchain transactions are easily traceable, allowing for an easier time finding and eliminating corruption. Further, with digital currency ledgers it is possible to analyze data and draw economic insights in real time. This would certainly help the government in the development of its broad plans and strategies.
Of course, there are also some potential reasons for hesitation. One of the biggest lies in the nature of cryptocurrencies up until this point. Most digital currencies were developed specifically to be decentralized and not tied to any particular nation, government, or bank. For currencies like Bitcoin, one idea behind this was to allow for privacy and autonomy for customers. Beyond that, there is a view that decentralized currencies will allow for transactions across borders and between institutions to take place more easily. Should a government enter the cryptocurrency field, this could challenge many aspects of the decentralized status of other currencies. If China's venture is successful, would other governments follow along the same path? What would be the ultimate result for existing currencies which are not tied to a larger bank in this way?