This article is about Professor Wang Yang, Vice President of Hong Kong University of Science and Technology, who made a speech at the first session of Hashkey New Vision, discussing the unfortunate consequences of China’s ban on mining businesses which has resulted in capital and tax outflow.
Professor Wang is an internationally renowned scholar who has published over 100 research papers in both pure mathematics and interdisciplinary mathematics, many of which are featured in top scientific journals. He has conducted in-depth research on China’s blockchain industry and made recommendations on the ban on Bitcoin and mining at the first session of Hashkey New Vision.
The following is the complete speech by Professor Wang Yang:
In 2012, I flew from the United States to Hong Kong, and then to Shanghai. I met a friend who had been my student for more than 30 years, when he was younger. He picked me up from the airport and told me about Bitcoin. At the time, I thought Bitcoin and blockchain were scams and didn’t pay much attention to it.
In 2014, I visited Hong Kong again, and he once again picked me up from the airport. He mentioned a young man who was very clever and suggested I learn more about Bitcoin. I had the same opinion and thought it was all a scam. However, they later found Xiao Feng. I realized that I had missed two very good opportunities, and it was a painful lesson to learn. Now, because I missed these two very good opportunities, I always feel that I am not qualified to tell everyone what to do in the future.
I think that in recent years, I have become more familiar with this area. I have often communicated with the government on policy issues, but they may not always like to listen to what I have to say because I always feel that their efforts are too small.
From another perspective, I think the pace of Hong Kong’s service is too slow, and we seem to be satisfied with the status quo. Hong Kong should have a higher goal, and should have the determination, even faith, to lead the development of the entire region, including the future direction of blockchain technology. I have been discussing the development of digital currency recently, and I believe that regardless of the outcome of the Sino-US trade war, there will definitely be a market for pure digital assets like Bitcoin, and it may grow bigger. However, we should not be satisfied with the current stage. I believe the ultimate prospects of the economy need to be combined with the real economy, this is a rigid requirement.
From any angle, this is a rigid demand for China. For example, why has Huawei become China’s largest beef supplier? Transsion, a very successful mobile phone company in Africa, may be well known to many people. But how many people know that Transsion is also China’s largest coffee supplier? This is because the local currency is easy to depreciate, and they use currency data to buy beef, which is a hard currency.
I have had discussions with many trade departments in China, including visits to Yiwu. For example, only half of the money from the goods sold in Yiwu can be recovered in renminbi or hard currency, and the rest are local currency which is not valuable. The problem we face is how to use these currencies. Argentina has what China needs, such as lithium ore and beef.
So, a problem arises here. In my opinion, the future development is very important. I have also frequently proposed this at the government level, but it is not always accepted. However, I believe that it is an important condition for the next generation of development to digitize the real economy, and of course, the integration of artificial intelligence, in which we are also doing well.
The future has development directions, but this direction requires more forward-thinking, and also needs to consider how to seamlessly connect decentralized technology with supervision on the chain, and share supervision with the real economy. This is actually very good, but it is challenging. As someone said, the reason we send people into space is because it is difficult. It is the same for Hong Kong, we should have a simpler way out, allowing areas that have already begun to profit to move out of this range. What to do next, I feel that this is a question that needs to be discussed separately.
I think that since October 31, 2022, Hong Kong’s progress in relevant policies has been slow, and I hope that it can be accelerated. Currently, the challenges we face include a shortage of talent, especially in the professional field of approvals.
I also noticed that there are problems with our programs themselves. For example, when discussing the digital economy, I once communicated with a government official and learned that there were nearly 50 people on the membership list of a government committee. In the United States, there was a study that said that if a committee had more than 7 people, for every additional person, the efficiency decreased by 15%, and with 50 people, your efficiency is 0.85 to the 43rd power, which is almost 0. Therefore, I think we need to reform and avoid formalism.
As for talent cultivation, the Hong Kong University of Science and Technology has been working hard. We encourage students to collaborate with the industry, to independently propose projects, and to form teams. HashKey has provided a lot of support for our students, and we also hope Futu Securities can provide support.
I am very surprised to find that our young people are very creative. Some students have poor academic performance, but when they encounter projects they like, they will go all out and invest great passion.
However, there is still room for improvement in Hong Kong’s emphasis on cultivating innovation. The development of Web3 requires not only funding but also the establishment of a good ecosystem, good policies, and the attraction of talents. Currently, Hong Kong’s talent plan mainly targets high-level talents, and overlooks the importance of talents at the lower end. We suggest that a complete Web3 ecosystem should be established by attracting a large number of talents, rather than relying solely on the traditional model of large capital investment.
In fact, after a new round of cleaning, I believe it is very difficult to completely eliminate them (unlicensed institutions). If I am doing business in Hong Kong and I am not a Hong Kong citizen, I have no reason to drive them away, right? I think they should definitely not be driven away. In a sense, these people will bring some vitality to Hong Kong’s virtual asset ecosystem.
However, regarding your question just now, I indeed do not have a very good answer. I have communicated with some leaders, and I think that completely banning mining is a very unwise move because the ultimate result is to drive the miners to the United States or elsewhere. An article in the American media once stated that this is a $4 billion tax bonus, because after these people go to the United States, they contribute tax revenue to the United States.
My personal opinion is that I told them not to drive them away. Instead of worrying about the outflow of funds, etc., it is better to let state-owned enterprises mine or invest in mining. For example, at least 20% of state-owned enterprises should participate in each mine, which would solve the problem and also ensure risk control. Of course, this is already in the past.
I think there is still a very big problem now, which is that when it comes to cryptocurrencies, it is immediately an uncontrollable situation. But China’s strategy may really need to go down this path. My personal view is that if Trump comes to power, China will need to re-evaluate all these policies in a very short time.
At this time, it is impossible to stop China’s trade just because there is a threat. So China must have a bottom line. Of course, China is currently developing socialism, and its own system at this stage, but in terms of quantity, it is not much at present. In the next step, especially in the development of countries along the “Belt and Road,” it is certain that RWA tokenization is the ultimate path. If everyone can truly realize the importance of RWA tokenization, it may not all be useless.
If so, I think the market will open up. I think there will be a breakthrough in about three years, which is that everyone may rethink what digital assets are, and whether we should embrace digital assets. This is my personal prediction. However, I have also predicted that Bitcoin is a scam, so this is for reference only.