CHINA has the world’s largest population of over 1,3 billion citizens, yet somehow they manage to meet the demand for cash in their country.
A currency is strengthened by the number of people who make use of it.
The high demand for the Yuan alone sustains the Chinese currency.
This high demand is owed to the large population of China.
Initially, the value of money was based on gold reserves but this hardly is the case nowadays. Demand for a currency has become the new determining factor of its value.
When Zimbabwe dollarised the economy, we were further strengthening the power of the US currency.
The US dollar is also strengthened by the policy that was set up by former US President Richard Nixon, which entailed the US dollar becoming the currency that would be used to buy petroleum.
This began with Saudi Arabia’s compliance and then the policy was adopted by every other oil producing nation in the world.
The US has no gold to back up its currency but relies wholly on the high demand for it the world over. Individuals like former Libyan President Muammar Gaddafi who challenged this policy and proposed for Africa to come up with its own currency which would become the new official petrol currency received great opposition from the West because this entails the destruction of the US currency and economy.
The US dollar is actually nicknamed the ‘petrodollar’ because that is where its value lies.
No wonder the US was instrumental in the murder of Gaddafi and the fall of his regime.
So if demand for a currency sustains its value, China, with a population of over 1,3 billion, is bound to have a stable currency for a long time to come.
In 2007, the exchange rate for US dollar in China was about 6,9 YN = US$1.
Today it is about 6,8YN = US$1.
Though prices of commodities have since risen, the value of the Chinese currency is still stable.
Another factor which allows for China to meet the demand for cash in the economy is plastic and cyber money.
This involves making transactions without using cash but instead bank cards, online banking and most recently, social networks.
While we also have bank cards in Zimbabwe, their use comes with exaggerated transaction charges when withdrawing, paying and sending money.
This is not the case in China.
One is only required to pay as much as one is charged for the commodity one wishes to buy and nothing more. This is greatly owed to the involvement of China’s Government in the running of the economy.
Full privatisation makes us vulnerable to high interest and service charges.
China’s government is socialist/communist and this protects its people from being abused.
Internet banking would have been efficient in Zimbabwe if the charges for internet service were not so high.
In a normal economy, the internet sevice is not expensive at all, be it in producing it or running it.
However, in Zimbabwe, we have the same situation as we had when cellphone lines were first introduced to our country. One had to sell a cow to buy a line but it’s only now that we realise that a phone line is only worth US$1.
This means that the players in this capitalist economy of ours are greedy and unsanctioned.
In China, broadband, fiber optic and Wi-Fi internet are cheap and easily accessible.
In Zimbabwe, this is not the case, yet going online is perhaps the best platform to conduct cashless transactions.
The inventor of fiber optic internet is a Ghanaian and he spent years researching how to make the service cheap.
Yet in Zimbabwe, fiber optic internet is so expensive because of corporate greed.
In China, even phone internet data is cheap and not too necessary because most places in the city will be online through Wi-Fi connectivity.
With one’s bank account linked to his phone or computer, cash becomes unnecessary but it is important that the transaction has a 1 as to 1 exchange without service costs.
The most used form of transaction payment in cities like Shanghai are social network wallets.
The Chinese social network is called Weixin or Wechat in English.
One links his bank account to his Wechat account and can transfer money to and from the bank with ease and without additional costs.
Each business enterprise, no matter how small, has a matrix barcode called a Quick Response (QR) code which is scanned by the consumer’s cellphone via Wechat.
The consumer punches in the amount to be paid and confirms the transaction with his password.
People can go for months without handling cash by these means.
This differs from our cellphone banking services which charge you for simply transferring your money from your bank account to your phone wallet.
The QR codes also speed up the process of identifying the payee and avoids accidentally sending the money to a wrong receiver.
The social network allows one to transfer or make a payment of up to 20 000 YN or approximately US$3 000 each day.
Once the bank account is linked to the Wechat wallet, overseas transactions can take place as long as one is online.
The Chinese are getting more and more estranged to cash and expect consumers to pay them through Wechat.
Shanghai alone has a population of more than 30 million people and it is clear how the above stated means of cashless payments quells cash shortage in the country.
The most important thing to learn from China is the socialist approach which aims to better the community and not exploit it.
In Zimbabwe, we are exploited by the companies which have the capacity to replace cash by supplying the above stated services.
The only way to ensure that the people are protected is Government intervention without corruption. Such is China.
The other problem in Zimbabwe is that the US dollar is not available anymore and was hoarded and exported by foreigners who need it to buy petroleum, among other things.
The Bond notes are not recognised outside of Zimbabwe. What then can we do?
Zimbabwe was not only dollarised by the measures set up by ex-RBZ Governor Dr Gideon Gono, but was made a multi-currency country.
Since we have a Look East policy, is it not a viable option to start using the yuan in Zimbabwe?
After all, the yuan is stable and recognised internationally.
The yuan is backed up by a large population and will not be affected negatively by an increase of 12 million users, but only further strengthened because of an increase in its demand.
The yuan and the social networks that support it can therefore be of use to us until such a time when we can re-introduce our own currency. The yuan will also be safer from organised pilferage by foreigners because unlike the US dollar or petrodollar, it has less demand on the international market.
As for our own currency, Gaddafi was right to endorse the formation of an African currency which will replace the US dollar as the official petroleum currency.
After all, Africa has the world’s most abundant natural resources ranging from plants, animals, minerals to fossil fuels.
Why then should the buyers of our products have the final say in what currency they should use to purchase our commodities?
In Europe, they have the Euro which can be used anywhere in Europe.
Why then can we not have a universally recognised Afro which we set up to be the main trade currency on our continent? This will increase uniformity and unity among the 50 plus African nations and would link our economies and markets.
A single twig is fragile but a bundle of twigs is strong.