Two sequential market crashes in China at the beginning of 2016 forced regulators to intervene in the main stock exchanges. However virtual currencies such as Bitcoin increased in value three-fold, while exposing potential risks, thus raising threat concerns for China.

2016 began in China with two sequential market crashes that forced the regulators to intervene in the Shanghai and Shenzhen stock exchanges. As they did in response to the stock bubble that burst in 2015, Chinese regulators intervened to organise a centrally-planned recovery.

Despite the stimulus of US$20 billion that the People Bank of China (PBoC) pumped into the market during the 5 January market crash, the yuan kept weakening. Gold as the usual commodity of refuge for investors during uncertain times started to gain momentum. At the same time, the virtual currencies that employ heavy cryptography and blockchain technology, such as Bitcoin, have increased in value thanks to the Chinese investments. (Instead of a centralised database to store records of all transactions, blockchain diffuses the data all over the Internet with anti-tampering cryptograph protection).

… Dr Alessandro Arduino is the co–director of the Security & Crisis Management programme at the Shanghai Academy of Social Science (SASS) and was a visiting senior fellow with the China Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.