Speaking of world leaders of technologies such as AI and Quantum Computing, China is worth spotlighting and they are rather successful in this sector. Thus, they are considered to be the tech leaders of Asia. Aside from the AI technology, China holds several other development plans for several technologies. Most importantly and also what we are sharing today, is that, in the future, China is expected to become the leader of Blockchain.
PwC’s survey reveals that most people view the USA as Blockchain leaders of today (2018). However, in 3-5 years, respondents view that China has more potential to become the leader. Why?
Looking into the factors supporting why people believe China has a future and potential for this technology, we may begin at the Blockchain development support in China. We see three main supporting entities, the government, the private, and the financial sector. They all play a part in driving the growth of Blockchain.
The government and policies that portray their awareness of Blockchain
These several years, China has established technology development policies. This began with the legal structure at the national level and their “Techno-Nationalism concept. This served as the foundation that guided them towards becoming the world’s tech leader. Today, China’s tech development strategy has been successful as seen in the numerous unicorn startups in the country. Moreover, a significant technology such as Blockchain is one of the key strategies that the Chinese government is supporting in an attempt to become the leader of Blockchain. Some examples are listed below.
- Recently, the Chinese government issued a statement regarding Distributed Ledger Technology or DLT and reviewed the benefits of Blockchain for its usage in national organizations. The objective is not only concerning the application, rather it is how to further develop it to best benefit China’s industries.
- China’s Ministry of Industry and Information Technology or MIIT has set up a lab for Blockchain development. Their objective is to improve the data security system and IT system by developing a new DLT. This operation is headed by the National Industrial Information Security Development Research Center.
- Commercial banks in China unveiled the government’s investment plan for the development of FinTech, Blockchain, and the Internet of Things (IoT). Commercial banks who have received government support has an investment plan for this operation that amounts to 483.7 billion RMB (70.2 billion USD).
- New Blockchain industries in Hangzhou aim to welcome talented individuals and young companies by providing supporting funds of several million USD. The local government in Hangzhou is supporting this project to develop research and encourage Blockchain startups.
The private sector: Baidu, Alibaba, and Tencent, the three Chinese giants are using Blockchain
Successful businesses in China are applying Blockchain to enhance their work. Today, businesses in China are competitive in developing the Blockchain technology. This is especially true for large enterprises with funds and knowledgeable human resources that are capable of applying Blockchain to their businesses. Different Blockchain highlights from each company are as follow:
- Alibaba sits among the world’s leading companies for its number of Blockchain patents. Moreover, it has built a Blockchain logistics system for tracking purposes. This is used to track goods manufacturing information, transportation, customs clearance, inspection, and third-party inspection.
- Tencent is collaborating with local government to pilot a data distribution platform via Blockchain. This can be used in medical treatment so that prescriptions can’t be tampered.
- Baidu has developed the Blockchain technology that eases consumer usage and services. The platform is called blockchain-as-a-service or BaaS.
The financial sector: Joining as a driver of Blockchain growth
Both the support from the government and private sector is a positive sign for China and portrays that the country is aware and interested in Blockchain. Aside from the aforementioned, the 2018 PwC worldwide survey shows the significance of the financial sector, a player who is also supporting the Blockchain. From the global perspective, financial services such as banks are early adopters with the most Blockchain applications and their growth is rather high when compared to other sectors.
Considering the factors contributing to Blockchain growth in each country, we tend to look at financial services such as banks. This industry is the key driver that propels and develops the technology towards actual applications. In China, together with the government and private sector, banks play a part in supporting and enhancing Blockchain. The People’s Bank of China or PBOC which monitors and regulates China’s financial matters are also supporting Blockchain development and applications. Examples are as follow:
- They have launched the Digital Currency Research Lab which aims to develop and support studies as well as funding for Blockchain-related projects. This is a collaboration with the government to improve economic policies.
- The Bay Area Trade Finance Platform is a collaboration with China Merchants Bank, Ping An Bank, and Standard Chartered. This is an attempt to assist and develop financial services by using Blockchain to enhance seamless interbank transactions. The objective is to provide SMEs with access to broader financial options such as asset-backed securities as information is easily shared with related parties via the network.
- A collaboration with the government to support the Shenzhen Fintech Limited project to develop advanced financial technologies. This project is led by top international financial R&D specialists who are also using the Blockchain technology
As we observe the key factors contributing to China’s path in becoming the leader of Blockchain, we see a collaboration of three sectors to sustain growth in order to lay the foundation for China’s economy. Moreover, this helps to drive Blockchain in each sector to continue its development. For instance, we see financial support and spaces for development as well as competition in Blockchain that will speed up the process.
These are some of our updates regarding China’s technology. We still have more tech stories in China and other countries. Follow us at the Digital Ventures Blog.
References: Brookings.edu, Pwc.com, Cointelegraph.com, ccn.com, coindesk.com