Why China Leads the World in Blockchain Development and Adoptionby Fintech News Hong Kong December 18, 2019
Blockchain has become a national priority for China both in the public and private sector. This is further accelerated thanks in part to president Xi Jinping who recently proclaimed the technology as an important breakthrough.
Efforts to launch a central bank digital currency and the deployment of regional blockchain initiatives are just a few examples showcasing that China sees the technology as an issue of national importance, according to a new report by Forkast.Insights.
In a paper titled China Blockchain Report: Blockchain Is Not China’s Future – It’s The Present, the company explores the country’s booming blockchain industry, highlighting the latest developments that have taken place over the past years.
China’s public blockchain initiatives
According to the report, blockchain is already playing a large role across China’s economy and it will only continue to do so. The central government has named blockchain a top priority, which it believes will drive growth for the next decade.
In China, blockchain is already a rapidly maturing technology and has real-world, practical use cases that are far beyond the experimental stage.
The technology is integrated in both enterprise and government clients with regional initiatives launched in Chongqing, Shenzhen, Beijing, Tianjin, Shanghai and Nanjing. These focus on facilitating the development of the technology in fields including supply chain management, credit, small and medium-sized enterprise (SME) financing, and more.
Most recently, the Hainan Province released a set of measures aimed at giving the industry a boost through initiatives relating to talent cultivation, technological application, social investment and other aspects, according to a report by Xinhua.
Efforts will be made to employ blockchain technology in multiple areas including housing, healthcare, tourism and trade, with a special fund of 1 billion yuan (US$142 million) set up to finance blockchain companies.
At the national level, the People’s Bank of China (PBOC) has the ambition to launch a digital token that would challenge the US dollar as well as the upcoming Libra stablecoin. Since 2014, the central bank has been researching blockchain and digital currency, and has filed 63 patents related to blockchain, the report points out.
China’s blockchain adoption in the private sector
In the private sector, blockchain is becoming ubiquitous with major stakeholders in healthcare, food, automotive, and technology sectors investing heavily in the tech. In 2019 alone, over 260 enterprise blockchain projects were launched in China.
Telecom operators including China Mobile, China Unicom and China Telecom, are embracing blockchain for better roaming, identity verification and fraud detection. In the agricultural and food and beverage industries, industry players are exploring the use of the tech to guarantee food quality through traceability. Companies are also experimenting with blockchain for use in used-car dealership, the medical sector, charitable work, among other areas.
Earlier this month, it was revealed that Bank of China had successfully issued 20 billion yuan (US$2.8 billion) in blockchain-based special financial bonds for small and micro-enterprises. Meanwhile, news broke that Tencent-backed digital bank WeBank will be one of the technical infrastructure providers for the nation’s blockchain network, the Blockchain-Based Service Network (BSN).
More blockchain patent in China than anywhere else in the world
According to the report, there are more blockchain patents filed in China than anywhere else in the world: Chinese firms represent 68% of the total global blockchain patent filings with over 10,000 patents filed in the country related to blockchain.
Another key finding from the research is that China is home to about 5,290 blockchain developers, a number that’s still small compared to other countries. According to the report, this is partly due to the country’s relatively immature software development sector, as well as the lack of formal post-secondary courses on blockchain.
In China 68% of active investment institutions are blockchain-focused
A separate research released by 01Caijing.com in October found that out of the 25 active investment institutions in China, 68% are blockchain-focused.
The research, which analyzes the blockchain funding landscape, revealed that in China, blockchain companies and projects funding have mainly been located in the Bohai Bay Rim area, Yangtze River Delta, Guangdong, Hong Kong, Macao and Sichuan-Chongqing regions. Beijing has the largest amount of financing, accounting for 45%, and Hong Kong has the highest average single financing amount at 262 million yuan (US$37 million).
Investment in blockchain is gradually shifting from startups financing to mid-to-late stage financing, showcasing that the industry is maturing, the research says.