Where does China stand on blockchain?
If the future is going to be built on blockchain, China appears likely to be a dominant player in its development. But in the eyes of Chinese officials, not all types of blockchain deserve equal opportunities.
Even as China ran away with the number-one spot in blockchain patent filings in 2017, the country has come down hard on cryptocurrencies. Over the space of just six months — between September 2017 and February 2018 — officials ordered all domestic cryptocurrency exchanges to close, declared initial coin offerings (ICOs) illegal, prohibited bank funding of cryptocurrency-related activities and banned access to overseas platforms for ICOs and cryptocurrency trading.
Such moves reflect the Chinese government’s concern that ICOs in particular were enabling fraud and illegal fundraising, Forbes reported in February. They also underscore a broader discomfort with a key feature of public decentralised ledgers: the ability for users to exchange money and data without the oversight and approval of authorities.
China has long exerted strict controls over citizens’ access to online information, especially to foreign news sites such as The New York Times and open knowledge-sharing platforms such as Wikipedia. But public blockchain applications can provide ways around such censorship. For instance, Fortune recently reported that one user in China shared an officially blocked exposé about vaccine fraud by posting it as part of an Ethereum transaction. Earlier this year, Chinese students used a similar strategy to publicly post an open letter about a sexual assault case at a university.
Meanwhile, a number of business leaders in China say blockchain could help alleviate the country’s well-recognised problems with counterfeit consumer products and unsafe foods and pharmaceuticals. In March, for example, online retailer JD.com announced it was working with Australian meat exporter InterAgri to develop a blockchain-based system to “provide consumers with even greater transparency on where their beef comes from and how it has been managed at every step of the production process”. And a growing number of organisations — both Chinese and foreign — are lining up to promote the Chinese Trusted Blockchain Alliance, an initiative led in part by the China Academy of Information and Communications Technology and the Chinese Ministry of Industry and Information Technology.
Blockchain has been praised by Chinese President Xi Jinping for its “breakthrough” potential, and it also appears in the nation’s most recent five-year economic plan, released in 2016. Yet despite the official enthusiasm — and billions in investment by VC firms and tech giants such as Alibaba, Baidu and Tencent — there remains some caution.
At a fintech gathering earlier this summer, Fan Wenzhong, who heads the international department of China’s Banking and Insurance Regulatory Commission, warned against the temptation to “mythologise blockchain”. He said: “Decentralisation is not a new trend but a loop, because the earliest human transactions were without central authorities.”
