(singer singing in foreign language)

- [George] The Chinesewere the first in the world

to invent paper money backin the seventh century.

Now more than 1,400 years later,

China is again on the cuspof creating a new form

of government currency

that some say could posea serious economic threat

to American and the West.

- [Narrator] China's about to launch one

of the most revolutionaryfinancial projects in the world.

- They're not cryptocurrencies,

they're not so-called stable coins,

in effect, they are thenational physical currency

of a country just representedin a digital form.

- [George] Erik Bethel is theformer US executive director

of the World Bank.

- Bitcoin near recordhighs, crossing 23,000.

He says while the world fixates

on private cryptocurrencies like Bitcoin.

- [Reporter] The digitalyuan isn't a payment system.

It's actual money.

- [George] Beijing is busybuilding a digital version

of its own currency, the yuan,

also known as the renminbito control its citizens

and eventually threaten the dominance

of the US dollar.

- They pretty much createdall of the building blocks

that will allow a central bankdigital currency to flourish.

And Yaya Fanusie, a former economic

and counter-terrorism analystin the CIA says China's goal

is to replace cash with a digitalcurrency that's controlled

by the Communistgovernment's central bank.

- China has said for a while

that it expects to prettymuch be a cashless society

in the future.

So the idea is that cash notes,

coins will no longer be around

and that people will beusing a digital currency

that's gonna be in their wallets.

- [George] That digital currency

will also be issued bythe government bank,

allowing what Congressman Michael McCaul,

the top Republican on the HouseForeign Affairs Committee,

says is unprecedented access

to people's financial transactions.

- This will give them data on behavior,

on people, how they spend.

- [George] And giving Beijing the power

to track that spending in real time.

- There will be a point

where the People's Bank of China

is gonna be able to look,

peer inside of every single transaction

that everyone does 24hours a day, 7 days a week.

- Which means if you area human rights activist

or a Christian, authorities

can now use this newtechnology to punish you

if you engage in activitiesthey consider anti-government.

- This technological ability

is something that thegovernment has never had before.

It always had to go to companies

to say okay, cut off this person.

Now the Chinese government I think

with sort of the proverbial,

the flip of a switch canmake people fall in line

by cutting off their access to money.

- [George] Eventually USand other foreign companies

doing business in China

will be required to use the government's

new digital currency payment system.

- There's a competitive issue.

There're, I'd say,

even cybersecurity issues, privacy issues.

You're handing over your datato the Chinese Communist Party

by participating in thisdigital currency system.

- [George] The US dollar is the world's

dominant reserve currency.

China's renminbi is number eight.

Beijing's ambition isto eventually supplant

the dollar's global dominancewith the digital yuan.

- The big concern is internationally,

especially for the US is in the long term,

this is an important step.

This is what I would call a FinTech,

a financial technology development.

And the issue is that China

is thinking decades in advance.

It's not thinking about the next two

to three years per se.

- [George] In June, theCommunist government handed out

more than $6 million worthof its digital currency

to its citizens

as part of a series oftrials around the country.

The first kicked off in Beijing,

allowing residents there

to use two government bank apps

to test digital payments.

China then plans to make itsbig digital currency splash

at the 2022 Beijing Winter Olympics.

Now that the world'slargest authoritarian regime

has launched this first-of-a-kind

sovereign digital currency,

some in the US, likeCongressman Mike Waltz

worry Beijing will usethis form of payment

to also skirt economic sanctions.

- The Chinese governmentconvinces countries like Burma,

Iran, North Korea andothers to do business

in that Chinese digital currency.

It'll also allow China and those countries

to work around one ofour most powerful tools,

which is sanctions.

- [George] Based on history,

Waltz believes China is only too happy

to share the technologywith other rogue regimes

that seek to enhance theirown surveillance capabilities

over their citizens.

- So that those other countries

in Africa, the Middle East and elsewhere

can dominate their people,

in line with the Chineseversion of government,

but that data then comes to Beijing

so that they will literally,

through facial recognition,be able to monitor the globe.

- [George] George Thomas, CBN News.