China’s Crypto Awakening or: How I Learned to Stop Worrying and Love the Blockchain
→ Exclusive commentary by Michael Sung, Co-Director at the Fudan Fanhai Fintech Research Center (FFFRC)
It’s great to be getting back to the Crypto Finance Conference soon — how things have progressed in less than a year at the last event! Last January in St. Moritz, I had indicated that China had an ambitious plan for its own digital currency called the DCEP (Digital Currency Electronic Payment), which the country had been studiously researching since 2014. At the time, digital currency regulation and best practices around the world were just beginning to be developed in earnest and fiat-backed stable coins were starting to pop up. The idea of a cryptocurrency issued by a credible sovereign nation was far from reality, not counting amateur efforts such as the Marshall Island’s SOV concept and Venezuela’s Petro.
If you have looked at any of the regulatory heat maps that were en vogue in publications at the time, China was the only relevant country in angry red and the prevailing sentiment was that China was going to remain a clear dead zone for anything related to crypto far into the future. The country had outlawed Bitcoin exchanges the previous September, clamped down hard on the frenzied ICO craze on the mainland, and then followed up by banned Bitcoin mining for good measure at a time when China miners accounted for the preponderance of global hash power (estimated at upwards of 70%).
The Silent Rise of Digital Currencies in China
To the Western world, it certainly did not seem like China was going to accept the brave new world of decentralization without a fight. Indeed, there was serious debate internally within the upper echelons of Communist Party leadership as to how to position the country with respect to the impending disruption by cryptocurrencies. In 2017, People’s Bank of China (PBOC), China’s central bank, created an independent Digital Currency Research Institute to research the issue and announced that it would prioritize blockchain development as part of its strategic Five-Year Plan. However, even as Bitcoin and ICOs were banned, the outgoing governor Zhou Xiaochuan had already made some uncharacteristically strong statements on the future prospects of the DCEP last year, mentioning that China’s digital currency concept was being deployed into testbeds and it was inevitable that the digital currency would eventually coexist with physical cash. The preceding years, the PBOC had silently become the leading institution in the world to develop the most blockchain patents and related infrastructure technologies for digital currencies.
The Libra Catalyst
Facebook finally announced its long-awaited but ill-fated Libra digital currency earlier this year in June, much to the consternation of governmental regulatory bodies around the world. The announced Libra Association was a consortia of strategic partners including the likes of Coinbase, Andreessen Horowitz, Spotify, Uber, Vodafone. However, they had almost immediately hemorrhaged partners including Visa, Mastercard, PayPal, Stripe, Booking Holdings, and eBay even prior the first official Libra Association meeting this past October. Before the horse even had a chance to get out of the gate, policymakers have taken turns to beat it to death, eliminating any chance of Libra getting approved in the foreseeable future. The world’s governments have independently but collectively decided that they should not leave it to unregulated private corporations to usurp their mandate on monetary policy, least of all ones that have such bad track records on governance, user privacy, misinformation, and media bias.
Prior to the Libra, governments around the world largely avoided the elephant in the room about the potential of cryptocurrencies to disrupt the international monetary system and world order. From the World Economic Forum to G7 Summit, leaders carefully danced around serious discussion about cryptocurrencies outside general condemnation and left the topic conspicuously off their official agendas, even as Bitcoin quickly legitimized itself as the digital gold of the modern era with institutions from the Nasdaq to conservative pensions and endowment funds. However, because of the rude awakening by Facebook, priority for developing and regulating digital currencies quickly jumped on the radar of central banks and policymakers around the world. In August, Mark Carney made a startling endorsement as the outgoing governor of the Bank of England when he called for the replacement the international monetary system dominated by the U.S. dollar by setting up a new “synthetic hegemonic currency” based on a basket of the world’s reserve currencies. Even Patrick Harker, President of the Philadelphia Fed, has recently conceded that it was “inevitable” that central banks including the Fed will eventually issue digital currencies. Still, he indicated, “I don’t think we should be the first mover as a nation to do this.”
The PBOC was paying high attention to Facebook’s digital currency project, and accelerated the timetable for launching China’s national digital currency immediately after Facebook revealed its plans for Libra. Wang Xin, Director of the PBOC’s research bureau, expressed concern about the potential consequences of the Libra on the global financial system. Mu Changchun, a former Deputy Director at the PBOC that was elevated to head the Digital Currency Research Institute to mastermind the DCEP, started a training course for government officials on the Libra two months later after its announcement. When I had discussed the DCEP at CfC St. Moritz in January 2019, it really was not on the radar for most of the world and nobody could have foresaw just how quickly the developments have come.
It is clear that China has a huge priority for getting a strategic jump on the rest of the world to be a top sovereign nation in the world to first to launch their digital currency strategy.
Facebook has since developed an intriguing ploy for persuading U.S. politicians to support its plan to implement the Libra. Mark Zuckerberg argued recently at a hearing for the House Financial Services Committee that regulators should view Libra as an instrument of American geopolitical power given that the basket of currencies underlying it would be predominantly comprised of the U.S. dollar (while pointedly leaving the Chinese RMB completely out of the picture). Zuckerberg warned that the U.S. would cede its dominance over the international monetary system to China if it didn’t embrace technologies such as cryptocurrencies the way China has, adding “If America doesn’t innovate, our financial leadership isn’t guaranteed”.
Kicking off the Fourth Plenary Session of the 19th CPC Central Committee, the first major policy meeting for the Chinese central government since early 2018, President Xi Jinping just called on the nation to “seize the opportunity” and take a “leading position” in the development of blockchain technology on Oct. 24, 2019. The government immediately passed a law to address regulatory and legal issues related to cryptography, an essential aspect of blockchain systems. This will be remembered as a historical day for the world as a critical turning point for both the crypto and blockchain industries, now that the world’s second largest economy has officially announced their strategic plans for blockchain which had been incubating for years. The ripples throughout the world has been nothing short of extraordinary. Bitcoin enthusiasts, the unlikeliest of people to support Xi Jinping or China in general, have been rejoicing the Chinese president’s comments on social media. According to Baidu, searches for the term “blockchain” surged by more than forty times after President Xi’s comments. Bitcoin rallied to hit USD 10,540 a day after the news from below USD 7,500, representing an overnight surge of over 40%. Eighty-five blockchain-related stocks immediately hit their 10% daily trading limit, and an index that tracks blockchain-linked stocks in mainland China rose nearly 9% to add to a total gain of more than 60% this year.
The World’s Largest Fully Fiat-Backed Digital Currency
Huang Qifan, Vice Chairman of the China International Economic Exchange Center (CCIEE), finally officially announced the launch of China’s national digital currency on Oct. 29, 2019 at the Bund Summit in Shanghai. Previously he had stated:
“The significance of Digital Currency Electronic Payment lies in the fact that it’s not the digitization of existing currency, but the replacement of reserve money (M0). It greatly reduces the dependence of the trading process on accounts, which is conducive to the circulation and internationalization of the RMB.”
The digital RMB that was launched is fully backed in Yuan by China’s central bank and will instantly become the world’s largest fully fiat-backed digital currency. Notably, the new digital RMB is implemented as a two-tiered system that is not fully based on distributed ledger technology because of scalability challenges as well as ideology. The centralized first-tier connects the PBOC with all commercial banks affiliated to it, while the second-tier will bridge commercial banks with retail customers and institutions. The PBOC announced seven initial institutions that would be receiving the initial disbursements of the digital RMB, including the top four banks in the world by total assets (ICBC, China Construction Bank, Agriculture Bank, and Bank of China), the two leading digital payment companies in China (Alibaba/Alipay and Tencent/WeChat Pay), as well as the top payment settlement company in the world (Unionpay).
The DCEP system was designed to handle 300,000 transactions per second, compared to the Visa network at ~20,000 transactions per second or the Libra at 1,000 transactions per second.
For context, Singles Day on Nov. 11 (the busiest e-commerce day of the year for China where Alibaba alone recorded $38 billion this past year with half a billion customers) requires ~90,000 transactions per second. Intriguingly, the DCEP is also designed to be pseudonymous (and hence pseudo-private), as it will not require any bank card, linked bank account, or even working internet connection to conduct digital RMB transfers. This makes it completely fungible and infrastructure-free, in a way unlike all other payment and remittance systems ranging from Alipay to Apple Pay to SWIFT. The digital currency can be transferred between parties simply by placing two digital wallet-enabled mobile devices in physical contact using proximity technology such as near-field communication (NFC) which is already available in modern smartphones. According to Mu Changchun, the DCEP’s “functional attributes are exactly the same as paper money, but it is just a digital form.”
Internationalizing the RMB as a Global Reserve Currency
The digital RMB is China’s counter-strategy to America’s outsized influence over the global financial system. Ever since the Bretton Woods system was put in place after World War 2, the rest of the world was forced to peg to the U.S. dollar as dominant world reserve currency. This dominance was further reinforced by the creation of the Petro Dollar in the 1970s that enforced trade settlement of the oil, the world’s most important commodity, to the U.S. Dollar. These two developments created an international monetary system that requires a preponderance of global trade flows through U.S.-controlled banks which can dictate the flow of dollars which other nations need access to in order to trade with each other. Thus, the American government has had the unique power to control the international monetary system by exerting pressure to enforce their foreign affairs and monetary policy around the world while imposing sanctions that cut non-complying countries out of the system. As the U.S.-China trade war intensifies, dependence on the dollar and America’s unilaterally-determined good-will is not something China (nor the rest of the world frankly) wants.
As such, China’s strategic long-term plan has been to facilitate the internationalization of the RMB as a global reserve currency. In order to do that, China needs to better facilitate commercial transactions and enhance efficiency for all of its trade partners around the world. The digital RMB will significantly bolster trade between China and countries participating in the Belt and Road Initiative, now representing over 152 countries that cover all of the high-growth developing nations in the world over the next decades and representing 65% of the world’s population and well over 40% of global GDP. By encouraging settling in RMB, China and its partners can greatly reduce the overt influence of the U.S. trying to exert its dominance over the international monetary system through strategic flow control of the dollar as well the Fed’s monetary policies. In the decades to come, most of the developing world will likely shift to include the RMB as a global reserve currency as economic interests with China expand.
The Global ICO Craze of 2017
With the digital RMB unleashed on the world, China’s tact with digital assets and associated financing is likely to radically change. The previous actions by China to ban Bitcoin and ICOs are much more understandable if you can understand the mentality of the central government. Crypto represented unregulated fundraising and overseas remittance that were both completely out of China’s control. As such, China had a large disincentive to allow Bitcoin and other cryptocurrencies/ICOs to suck capital flows out of the country at a time when the government was trying very hard to restrict capital flight which could destabilize the economy. Add to that the potential for Bitcoin for money laundering by corrupt government officials, tax evasion by individuals, and for funding terrorist events (this is not hypothetical), you can understand the practical concerns of the central government.
In addition, millions of low-income country-side villagers (the Chinese equivalent of hapless grandmothers in the U.S. that the SEC cares about), were losing their shirts in outright scams from mainland ICOs. This is something that is socially destabilizing that the Chinese Communist Party leadership is particularly concerned about. The Wild Wild East ICO variants in China are also mutants on steroids through aggressive MLM-style tactics enabled through highly coercive WeChat groups, making the ICO craze in the rest of the world during 2017 look positively angelic. It is hard to estimate the scale, but it is probably not a stretch to say that the China market for ICOs was easily a multiple of the rest of the world combined at the time, and it still is quite frothy now in spite of the official ban. China has recently re-engaged sweeping crackdowns on ICO and cryptocurrency trading activity in Shanghai, Beijing, and Shenzhen.
Strategic Legitimization
A good reference case for the future path China will likely take with regard to digital assets and financing is to look at how the country dealt with the P2P lending craze that took hold over the nation in the early 2010s. The fashionable new finance innovation at the time allowed thousands of unregulated firms to provide small to medium business and individuals alike access to capital that was not available anywhere else. At the time, access to capital was limited through an informal and a highly predatory shadow banking system because most bank lending would only be given to highly inefficient state-owned enterprises, who would then re-lend money down a chain of middlemen with high markups along the way. When the same type of aforementioned shenanigans started happening on a massive scale affecting a lot of low-income citizens, the government stepped in and issued a blanket ban which killed 80% of these companies almost overnight. However, a few years later, a handful of the stronger industry leaders were legitimized to become licensed operators in the industry. I believe this will be what happens with the regulation of digital assets in China, and that this will happen very fast now that China has its blockchain infrastructure strategy set for being able to monitor these activities.
Now that China has a digital currency they feel they have a good control over, it is my opinion that sooner rather than later the government will change tact and allow regulated activity to occur. This will allow all of the huge pent up mainland investment demand in crypto to flood the world to invest in regulated STOs and other digital assets that China can control and monitor the financing of via the digital RMB. Also, China would love to encourage controlled foreign direct investment into China’s local ecosystems. As foreshadowing, Li Wei, head of the technology department at the People’s Bank of China, recently encouraged commercial banks to step up their application of blockchain to finance and Fintech opportunities.
The digitization of assets, or anything of value for that matter, represents the next massive digital revolution.
By creating digital assets, you can provide the friction-free ability to trade those assets, which will provide massive liquidity to previously non-fungible asset classes. This will then allow for the financialization of these asset classes and new industries and markets can be created overnight. Blockchain and the enabled crypto-token finance and business model innovation is where the next trillion-dollar opportunities are. Right now, you can walk into any industry, from real-estate (a USD 217 trillion dollar market representing 60% of global wealth) to fine art (USD 65 billion dollar market) and be an industry leader. The technology for scaled deployment is just getting up to speed, as is the legal innovations and best practices. This is all happening just as regulation is getting set around the world, but the rigorous financial engineering necessary to create the turbo-charged financial products that will beget strong institutional traction has not happened yet. Exciting times!
The Fintech Side of the Story
In China, internet and credit card infrastructure was slow to take off, so its citizens jumped directly onto mobile online services when they became available, allowing China to leapfrog the world to the forefront of e-commerce and digital payment technologies. This in turn results in a huge downstream competitive advantage in terms of scale for the digital “oil”, aka data, necessary to drive practical big data and AI applications for modern digital industries.
China has gone completely digital for payments and related financial services, which are all now available on mobile through a number of so-called super-apps like WeChat and Alipay. These super-app ecosystems allow for big data aggregation which feeds brand new competitive services such as ultra-high accuracy credit risk analysis for instantaneous micro-lending.
The pioneer in this area has been Ant Financial, the Alibaba spin-off that created Alipay which is now worth north of USD 150 billion as the world’s most valuable Fintech company. Ant Financial offers financial products such as instantly-approved micro-loans and the world’s largest money market fund for retail investors completely online through its own ecosystem. However, recently there have been some overt moves by the central government to slowly restrict the current near monopoly power this company wields to provide a more even playing field for both incumbent state-owned banks as well as new startups.
In the crypto world, blockchain is synonymous with the philosophy of decentralization. However,
the future deployment of blockchain in China will not be the decentralized version that is fancied in the West and by Bitcoin maximalists.
The Chinese government is generally wary of public blockchains, which allow individuals to participate in helping to maintain the shared accounting ledger and transferring assets without identifying themselves. China’s focus is still on blockchain and Fintech applications that can complement or optimize existing platforms and institutions. This guarantees inclusion, which is critical in a nation that is dominated by existing national champions for each industry.
Furthermore, it’s important to understand the hybrid nature of how this will develop: It’s not surprising that the PBOC is now leading the way in digital currency since digital payments have already effectively existed in China for years; the next phase now is to allow third parties and the international community to engage. As we move to the next chapter of development, an absolutely necessary condition to move forward in China is to develop infrastructure that can augment existing systems, not completely disrupt them. This was also the case when China started opening-up to rest of the world in 1978. The economic reform was about allowing market mechanisms to interface with the existing system. This new stage of liberalization will be about iterative improvement to allow for blockchain’s distributed nature while staying true to China’s general capital market structure that has witnessed the largest and most sustained economic growth on record.
All the above is just a taste of China’s dream for its future plans for global leadership.
The Road Ahead
It is important to realize that the digital RMB strategy is only one facet to China’s master plan with blockchain. Chinese central government also sees blockchain as the critical next-generation IT infrastructure to build their future smart cities, connecting cryptographically-secure databases linked by 5G to scalable cloud and data management infrastructure such that big data/AI analytics can efficiently run on top. China simply can’t implement all of that at scale with a mashup of decentralized systems at the moment, nor does it want to even if the performance wasn’t the gating issue given the attendant security issues related to sensitive government information and citizen privacy. Thus, a permissioned blockchain ecosystem becomes the key infrastructure of infrastructures that allows the vertical integration of cloud computing, 5G communications, industrial IOT, AI/big data, with Fintech and other application-level services overlaid on top of the stack.
China is the only country in the world where smart cities deployment is being conducted on a systemic country-wide scale. It doesn’t make sense for the country to try to create a nation-wide smart city network without interoperability between the blockchain and IT platforms. President Xi has directed deep integration between blockchain and other information technologies during the aforementioned strategy planning meeting. China’s official state-run news agency, Xinhua, quoted Xi as saying blockchain would serve “an important role in the next round of technological innovation and industrial transformation” and called for greater levels of research and investment into the industry. China’s media is a tightly choreographed affair, with every official’s comments carefully scripted in a way that everyone can clearly read between the lines, so that the entire country can implement the directives under the top-level guidelines that are both explicitly and implicitly laid out.
When 1.4 billion people move in the same direction with a ferocious and cut-throat entrepreneurial ecosystem that has developed over the last half decade, amazing things will happen.
China’s Pole Position
Add to that basis the sheer scale of the essentially unlimited capital of the Chinese government combined with world’s largest private sector investment base, China can give any industry it wants the sustained resources to develop critical infrastructure for national strategy. Technology platforms which require tens of billions of dollars over decade-long timescales are virtually impossible to build elsewhere in the world based solely on the private sector and short-term profit-seeking free market model favored by the West. In addition to 5G, China will be taking global leadership in quantum communications, AI chips, electric vehicles, and Industry 4.0, just to name a few industries. China central government has long-term plans for the country and can patiently devise strategies that are forward-looking decades out, which gives it huge strategic advantages over other countries that run on democratic election cycles with bipartisan dynamics that tend to undo each other’s work every few years. Then throw on the fact that China has its own indigenous market that is also 10x the size of most other countries which the government can force the consumption of its own domestically-developed technologies. Complete that with the fact that the country also has 10x advantages on available data (which gives an asymmetric advantage for big data and AI applications) as well as engineering talent, and you end up with a situation where China has a nearly unassailable stack of dominating advantages over the rest of the world.
In such a world, the U.S. has currently opted to trying to do everything in their power to undermine China’s emerging ascendancy on the world stage by leaning on its allies to reject Chinese technology and business.
Instead of focusing on how to innovate and collaborate, America’s overt stance is that of containment and slowing down China’s advancement both as a technology and global power.
This stance is leading rapidly to a bifurcated world with two isolated and increasingly hostile world ecosystems, one led by a dwindling U.S. coalition on one side, and one led by China, that will consist of most of the developing world which is more interested in economic development rather than Cold War politics. The recent U.S. moratoriums on technology exports and tariff protections have only accelerated China’s timetable to become more self-sufficient while hobbling the competitiveness and growth of America’s own national champions.
I think I’m making a compelling argument that both the world’s future digital information technologies and finance infrastructure will be increasingly driven by China — like it or not.
Given this reality, perhaps it is more fruitful for the U.S. to figure out ways to engage in China more synergistically rather than have things devolve into zero-sum game dynamics. This is the classic prisoner’s dilemma game theory, where pre-emptive dynamics in anticipation of retaliation will undermine everyone at the table rather than leading to an enlightened solution where both sides can win more. It is indeed a brave new world, one that for some in the West may be very disconcerting because of self-perceived loss in strategic positioning. However, it is also the brave new world of the next digital revolution, enabled by crypto and blockchain, that can unlock new collaborative modes with unlimited future potential. If it is inevitable that China will be building important parts of the future global ecosystem that will be adopted by a good fraction of the world’s nations, it would be much better for the U.S. and their allies to figure out how to connect to this ecosystem rather than to shun it.
Changing the System From Within
Despite China’s growing pains in becoming a responsible global superpower that can be given the trust of all nations, China has at least clearly demonstrated that it has the desire to develop in a peaceful way through economic integration with the rest of the world rather than, say, through military expansionism. China’s strength lies in its strategic development model which allows the leadership to gradually adapt its political system through trial and error, propagating the policies that work up to higher levels until the entire system is changed from within. The Chinese Communist Party has only been that in name for decades; imagine the surprise of someone growing up in the early 1970s after China opened up to the world and embraced capitalist market dynamics by 1980? More recently, I would posit that it would be just as inconceivable to anyone living a decade ago that China, once the number one polluter in the world, would be leading the world in sustainability and environmental protection half a decade later. China has adapted admirably over the last forty years to align more with global values and priorities and should be given the chance to prove its ability to do so into the future.
China has actually been modernizing the nation in phases since the founding of the nation in 1949, focusing first on agricultural development, then industrial progress and more recently on technological advancement. The next focus is to modernize its system of governance as a bespoke, uniquely Chinese political system dubbed “Socialism with Chinese Characteristics”. At the aforementioned Fourth Plenary Session which just ended, China’s leadership has been strongly focused on the advancing the modernization of China’s governance system and governance capacity. This includes fully implementing the country’s constitution to advance the rule of law for public good in the areas of environmental protection, food and drug safety, intellectual protection, etc. The focus is on “scientific” data-driven policies that prove effectiveness in terms of impact and increasingly reflects the will of the Chinese people. Finally, even the organization of the Communist party itself and its public institutions is being restructured and optimized as we speak. The final evolution of the Communist Party will eventually result in the creation of a modern socialist nation which should not be so unlike a Western-friendly Scandinavian country. This process, with strategic plans up to the middle of the century in place already, will see an ultimate political and societal realization of the China socialist system that will be prosperous, harmonious, and yes, perhaps even more democratic.
Closing Thoughts
In the context of the entrenching ‘Tech Cold War’ between China and the United States, and as the two countries become increasingly more competitive for global leadership in defining the future standards for the world’s technology infrastructure and global monetary system, there is one more point I would like to emphasize: In my opinion, there really isn’t a war. If there was, China has already won it in the long run based on the systemic competitive advantages that I have outlined above, the trends of which will only becoming more obvious in the years to come. I am aware that some of the statements made in this article are a bit provocative and might make me come across as a China apologist to some people from West these days. However, I think it is important to speak my opinion truthfully as it stimulates the necessary discussion about the realities of the evolving global dynamics and shifting world order. I’d also like to clarify that I am both a proud American by birth as well as a proud ethnic Chinese at heart and I refuse to believe that I can only be considered an oxymoron in the modern world as it exists now.
Given this bi-cultural heritage, I believe that it is my duty to figure out ways to bridge the distrust and misunderstandings on both sides. Since I am both a technology venture builder as well as a Fintech academic passionate about business model innovation, I have come to the ultimate conclusion that blockchain technology holds the key to creating new ways of developing practical win-win scenarios such that we can back out of the increasingly bitter stalemate that the two sides of the world currently finds themselves in. As the title of my commentary alludes to, “Dr. Strangelove or: How I Learn to Stop Worrying and Love the Bomb” is the magnum opus Stanley Kubrick, one of the most influential directors in cinematic history. The movie is a satire about contemporary Cold War attitudes, and primarily focuses on the theory of mutual assured destruction in which each side is supposed to be deterred from a nuclear war by the prospect of a universal cataclysmic disaster. Sound familiar? The movie happened to be a collaboration by Kubrick and the famous game theorist and Nobel Prize in Economics winner Thomas Schelling. Schelling’s seminal work was called “The Strategy of Conflict” which The Times Literary Supplement ranked as one of the hundred most influential books in the 50 years since 1945. In Schelling’s theory, one must seize opportunities to cooperate instead of only trying to defeat your opponent, as only in the rarest of occasions are there what he termed “pure conflict.” I will end by saying:
Only in learning to stop worrying and love the blockchain can we truly free ourselves from the prisons of our own minds that are shackled to the old Cold War Era ways of thinking about the world.
In doing so can we finally unleash the power of the collaborative ethos of trust that blockchain technology engenders so that we can not only avoid mutual destruction, but thrive together to build the future that we all must live in together.
About the Fudan Fanhai Fintech Research Center
The Fanhai International School of Finance (FISF) at Fudan University is positioned as the premier internationally-focused advanced economics and finance school in China. Established at the end of 2016, FISF was endowed with one billion RMB (USD 150mm donation), the largest single donation to higher education in the history of China. This has allowed us to build a world-class faculty, which include industry experts such as the chief economists of Goldman Sachs and HK Monetary Authority.
FISF also runs the China Institute of Economics and Finance, a national-level think-tank that conducts research for government policy on topics such as digital currencies, finance innovation, Fintech strategy, and digital asset regulation. We are working to modulate the best practices from the emerging regulatory leaders of the world (e.g. SEC in the U.S., FINMA in Switzerland, and MAS of Singapore) to give policy recommendations for China’s regulatory bodies such as the China Banking and Insurance Reform Commission (CBIRC) on Fintech and digital asset policy and People’s Bank of China (PBOC), China’s central bank, on digital currency policy.
The Fudan Fanhai Fintech Research Center (FFFRC) is China’s leading applied Fintech research center focused on connecting the rest of the world to Greater China. We are engaging with top international experts around the world to set up applied research programs on topics such as digital currencies, digital asset innovation, cryptoeconomics, asset-backed securitization, digital finance, and crypto-token business model innovation. Sample projects underway include real estate tokenization and fractional ownership financing, crypto-bond and blockchain auditing for infrastructure projects, computational trust systems for credit risk analysis in the financial markets, digital RMB policy, etc. We welcome open collaboration with our various research programs in any of these strategic topics that will shape the future of the finance industry and the global monetary system. We host our annual Future of Finance and Fintech Forum every year at Davos.
About the Author
Prof. Michael Sung is a technology venture builder and investor, having founded various companies over the years in diverse high-tech industries ranging from AI, blockchain, semiconductor, and new materials industries. He is founder and Chairman of CarbonBlue Innovations, a cross-border tech-transfer and commercialisation platform that is focused on rapidly commercialising and scaling internationally-sourced tech innovation for Greater China. He is also a founding partner of FinNX, cross-border investment bank platform and venture partner for Fundamental Labs, one of Asia’s top blockchain funds.
Prof. Sung is founding co-director of the Fintech Research Center at the Fanhai International School of Finance at Fudan University. His applied research includes Fintech policy, cryptoeconomics, asset-backed securitization, as well as finance and business model innovation associated with cryptotoken economies. In addition, Prof. Sung is focused on developing finance innovation policy as faculty at the Chinese Institute of Economics and Finance, a national-level think tank for central government. He is also faculty at HK University of Science and Technology, where he teaches executives and MBA/EMBA students on tech entrepreneurship, innovation thinking, and doing business in China.
Prof. Sung has served in numerous advisory roles over the years for the HK, Taiwan, and China governments on international tech transfer, innovation ecosystem building, AI, blockchain, and Fintech policy for various top city and minister-level officials. He is frequently invited to speak at international events including at the UN, Vatican, Money20/20, and CFC and has organized and hosted high-profile events including the One World Blockchain Forum and Future of Fintech and Finance Forum at Davos. Prof. Sung serves as a member of the China Digital Finance Advisory Group for the UN Task Force on Digital Financing of the Sustainable Development Goals. He was also the Chairman of the Steering Committee for MIT Tech Review’s Emtech HK Conference. He has received various awards for technology entrepreneurship, including MIT Enterprise Forum’s Most Visionary Technology Award and Google’s Solve for X Prize. Prof. Sung received his Ph.D. in EECS at the MIT Media Lab/Computer Science and Artificial Intelligence Laboratory as well as a graduate financial engineering degree from MIT Sloan Business School.
