Everything You Need to Know About Blockchain In China
China's relationship with blockchain's offspring of cryptocurrency is troubled, to say the least, but it's making big developments in the sector
Blockchain is revolutionary, malleable technology - and China knows it. The Asian superpower accounts for 25 per cent of new blockchain projects worldwide and holds the most patents related to blockchain in the world. Further, some of the biggest names in the blockchain and cryptocurrency community are Chinese firms - and this dominance is not by accident.
The Chinese government has included its development in the nation’s 13th Five-Year Plan and, last year, President Xi Jinping said China seeks to lead in innovation worldwide. Let’s examine China’s approach to the technology and the applications being created in this ecosystem.
The Thing About Crypto
China’s relationship with blockchain’s offspring of cryptocurrency is troubled, to say the least. The nation is one of the biggest miners of digital currency and yet actively makes the use of such crypto illegal. Nonetheless, China is making big developments in this sector regardless of legal status.
For example, the People’s Bank of China announced in August that after five years in development, it is ready to launch its own digital currency, although no date has yet been set. This is an ambitious project which demonstrates the nation’s desire - like other aspects of Chinese life - to centralize power and oversee control.
It remains to be seen what this virtual currency looks and acts like, but experts believe it will likely have little to do with cryptocurrencies that have gained global popularity up until this point. The currency is predicted be supervised at two levels - with the People’s Bank of China above and the country’s commercial banks below - to adequately manage distribution over such a large economy.
So, why is China doing this? There are two theories. The first is to generate digital currency that is immune to fluctuations and speculations that is so often seen in traditional crypto. The second comes back to control. If China is the issuer, they are also the controller. National virtual currency issued and distributed by the government would allow for transaction traceability and work to avoid payments on the black market.
Applications Showing Promise
Chinese blockchain is more than currency, however, as the country continues to be a hot-bed for national and international projects. Just look at Chinese technology giants and internet companies who have already started building their own blockchain ecosystems and projects in finance, logistics and supply chain.
For example, one project looks to provide a flexible and efficient platform for various business applications and scenarios. It provides blockchain 3.0 with a powerful network throughput and high concurrency processing capabilities for smart contracts.
Another project with similarly lofty ambitions looks to build the cornerstone of trust for the digital economy. This project endeavours to become value connectors for enterprises and institutions to jointly promote the development of value internet. This autonomously controllable blockchain infrastructure could be a game-changer in the years to come.
Further, foreign companies are becoming more comfortable with Chinese blockchain partnerships. Walmart is partnering with JD.com, IBM, and Tsinghua University on a collaboration to enhance food tracking, traceability and safety. Working with food supply chain providers and regulators to develop the standards, solutions and partnerships to enable a broad-based food safety ecosystem in China, JD has launched its food tracking chain.
Lastly, Central and Eastern European Countries teamed up with China in August to form the China-CEEC Blockchain Centre of Excellence. The project goal is to become a leading research and innovation centre for distributed ledger technology to be applied in industrial applications across numerous verticals such as energy, finance, aerospace, manufacturing, logistics, commerce, media, government and others.
The Future Of Chinese Blockchain
So, where is this going? And what does this mean for the rest of Asia and the world?
As of 2018, there were 263 China-based projects in progress. Meanwhile, there are 615 blockchain companies or subsidiaries already in China with most having launched in the last two years. This includes projects from Chinese internet giants Baidu, Alibaba and Tencent.
In fact, one in two Chinese respondents told Deloitte their company used blockchain as part of 2018 global blockchain survey - in stark contrast to only 14 per cent in the U.S. While blockchain is mainly used in financial services in China, other industries, such as public services, healthcare, supply chains, are experimenting with the technology.
In China, it's obvious that any wide use of blockchain means government oversight. Blockchain in this part of the world removes those romantic ideas of the technology giving power back to the people. An idea like this is naive in China. Nonetheless, China does see its value and appears to be getting ahead of the technology by creating useful products which are under the lock and key of the central system. Time will tell what this means for user rights and personal freedoms, but there is no denying that the Asian superpower is likely the biggest developer of blockchain tech and applications right now.