A glimpse at China’s blockchain ecosystem
By Emma Zhou, Marketing Intern, Master of Journalism Candidate, University of Hong Kong.
Over the past two years, the once unfamiliar technical word “blockchain” has increasingly come into the public eye. Although Bitcoin and other cryptocurrencies were banned in China, the blockchain, as their underlying technology, has been the focus of much attention from various industries.
The Chinese government attaches great importance to blockchain technology. At the 2016 G20 Summit, blockchain and financial inclusion were listed together among the most important topics highlighted by the Chinese government. Since then, thanks to the support and guidance of the government, blockchain focussed experiments and initiatives are sweeping the country.
China’s well-known internet and technology companies, such as Baidu, Tencent, and Alibaba, collectively known as BAT, are scrambling to invest in blockchain technologies. A large number of blockchain startups have sprung up rapidly. The strong enthusiasm for blockchain has given birth to various China based industry alliances and research organizations, which aim to serve the blockchain development community and coordinate resources within the industry.
Government lead initiatives
In February 2016, the PBoC Governor Zhou Xiaochuan said that the Central Bank is studying the application of blockchain technology for a state-issued digital currency and exploring other applications of the technology.
In October 2016, the Ministry of Industry and Information Technology jointly issued The White Paper on China’s Blockchain Technology and Application Development with seven other organizations including Wanxiang Group, WeBank, Ant Financial Cloud and LeTV, analyzing the development of blockchain domestically and overseas, and presenting a roadmap for the development of blockchain technology standards in China.
In December 2016, the State Council identified blockchain as a strategic technology into the 13th Five-Year Plan for National Informatization.
In April 2017, Wuzhen Think Tank released The White Paper on the Development of China’s Blockchain Industry. The paper introduced global domestic blockchain industry trends and provided valuable knowledge to research institutions and related enterprises.
A few months later, the National Committee of Experts on Internet Financial Security Technology published the Compliance Blockchain Guidelines.
Aside from policy support, the government also led the establishment of some blockchain research forums and alliances, like the China Blockchain Technology and Industry Development Forum led by the Ministry of Industry and Information Technology, to guarantee the healthy development of the blockchain industry in China. In addition, official media organizations such as Xinhua News Agency and People’s Daily help to popularize blockchain technology in their reporting, which demonstrates the government’s great interest in this topic.
Enterprise lead initiatives
The state backed support for blockchain focuses on the bigger picture for the development of the Chinese blockchain ecosystem, while the initiatives led by Chinese enterprises can be seen as the engine of this blockchain boom.
Tencent is the most active major Chinese technology company building blockchain applications.
In April 2017, the company released a white paper detailing a suite of blockchain services currently in development. The Trust SQL platform invented by Tencent is designed to provide enterprise service solutions.
In addition, relying on its large user base of social media (WeChat) and payment tools (WeBank), Tencent established the first digital private bank in China. In July, three blockchain firms led by WeBank developed the Blockchain Open Source (BCOS) platform, providing blockchain application services for enterprises. BCOS has now become the first commercial blockchain technology platform in China.
Like Tencent, the internet conglomerate Alibaba has also invested heavily in the blockchain domain.
On March 4, 2017, Alibaba built a blockchain based supply-chain tracking system in partnership with PwC to trace the process of food delivery from overseas producers to Chinese consumers. In August, Alibaba, in cooperation with the Chinese government, launched the first blockchain medical application in China. Alibaba’s existing finance arms, Alipay and Ant Financial have also introduced blockchain to track the spending activities from charity donations.
Compared with Tencent and Alibaba, Baidu has lagged behind in blockchain initiatives. However, relying on the platform advantages of its Chinese web search engine, Baidu has stepped up its blockchain development efforts since mid-2017.
In June 2016, Baidu invested in Circle, a global peer-to-peer blockchain payment technology company. In October 2017, Baidu became a member of Hyperledger, an open source enterprise lead blockchain initiative. The vice president of Baidu said he believed blockchain technology could help the company improve its user experience by providing content catered to local tastes and personal preferences.
Apart from BAT, other well-known internet and technology companies in Mainland China, including Dianrong, Jingdong, 360, Huawei, 163, Renren, and Xiaomi are also developing and investing in blockchain projects.
Alongside the roll out of blockchain applications built by major Chinese tech firms, there are also new entrants trying to innovate in this field. These include cryptocurrency exchanges (which have subsequently been shut down), e-wallet and money transfer services, blockchain infrastructure developers, enterprise platforms and security providers.
These startups have attracted considerable funding thanks to all the hype around the blockchain business boom. Since February 2016, 177 blockchain projects have received funding in China raising more than RMB 14.38 billion (USD 2.2 billion). Among these investments, angel and seed funding represented over 50%, from which we can see that the blockchain industry is still in its early stages of development.
Chinese Blockchain Alliances
Various industrial alliances, forums, and research organizations emerged in Mainland China as the number of blockchain companies grew.
Well-known alliances in the country include the Z-Park Blockchain Industry Alliance, China Ledger Alliance, Financial Blockchain Shenzhen Consortium, China’s Blockchain Research Alliance and Decentralized Autonomous Coalition Asia.
Major blockchain companies, internet and technology groups, and prestigious universities have joined these alliances to contribute to the blockchain ecosystem in China. Thanks to these alliances, many of the brightest minds in China are now gathered together to provide education and technical expertise on blockchain and distributed ledger systems to help boost the further growth of this technology in the long term.
The Gatecoin team is excited to see how blockchain technology proliferates in Mainland China over the coming years and we look forward to supporting the nation’s most innovative projects.
