China has integrated blockchain into various sectors of society.

Article Title: "China Bets On Massive Blockchain Infrastructure"

Author: Andrey Sergeenkov

Source: Forbes

In October 2019, conclusions drawn from a study published in the Journal of Physics: Conference Series indicated that China regards blockchain as a crucial breakthrough for independent innovation in core technologies, clearly defining its primary direction, increasing investment, and accelerating the development of blockchain technology.

According to a study published in the International Journal of Business and Finance Research, this speech eliminated uncertainties regarding the development of blockchain technology in China, sending a strong signal that China would support and allocate more resources to develop this field. Subsequently, China made another key decision to treat data as a critical factor of production, equally important as traditional factors such as labor and capital.

Blockchain Becomes Part of China's National Strategy

One of the key components of China's blockchain strategy is the Blockchain-based Service Network (BSN), launched in 2020. According to a March 2021 report by CoinDesk, the BSN provides a government-controlled framework for blockchain developers, supporting applications built on multiple blockchain networks. The system offers two versions: one for domestic users in China and another for international developers.

Notably, the domestic version allows authorities to censor or delete an entire blockchain when necessary. He Yifan, CEO of Red Date Technology, the company behind the BSN, stated in an interview with CoinDesk: "If they do something wrong, we can delete the entire chain."

In March 2021, China formally incorporated blockchain development into its national strategy by approving the "14th Five-Year Plan" (2021–2025). The plan includes initiatives to promote the development of the blockchain industry across 29 provinces and municipalities nationwide. A research article in the journal Big Data & Society pointed out that this push aims to enhance China's global competitiveness in key economic sectors through so-called "Chinese-style blockchain"—blockchains that do not issue cryptocurrencies.

On July 31, 2023, Shanghai released an implementation plan to promote the development of the city's blockchain digital infrastructure system for the period 2023–2025. An article by Cointelegraph noted that the plan aims to strengthen the application of blockchain in Shanghai's economy and governance, support municipal affairs, and coordinate resources in the Yangtze River Delta region to create an international blockchain hub.

China views blockchain as part of "national technological solutionism," a technical tool for enhancing national competitiveness and modernizing agriculture. This approach aligns with broader national goals, including "national rejuvenation." An article in the journal Big Data & Society argues that this perspective stands in stark contrast to the vision advocated by the Western cypherpunk blockchain movement, which emphasizes decentralization and freedom from government and corporate control.

Chinese Policy and Blockchain Investment

According to various Chinese news sources, blockchain technology is being integrated into multiple industries. In 2024, China utilized blockchain to promote foreign trade, social and economic development, the digital trade sector, and the construction of new information infrastructure. Furthermore, courts at all levels are exploring the use of blockchain technology to improve judicial processes. This integration is proceeding alongside other advanced technologies such as 5G, artificial intelligence, the Internet of Things, and big data analytics.

In May 2023, China established the National Blockchain Research Center, with the goal of cultivating at least 500,000 blockchain professionals for the country. By comparison, according to data from the Developer Report website, there are currently only about 26,000 active blockchain developers worldwide.

In August 2023, at the Hangzhou Summit, officials launched the Hangzhou Data Exchange, a blockchain-based data trading platform. The platform uses distributed ledger technology to allow enterprise IT data transactions, providing an immutable and traceable transaction system. According to a report by China News Service, more than 300 companies, including Alibaba Cloud and Huawei, participated in the platform's initial launch.

In December 2023, the Ministry of Public Security of China launched RealDID, a blockchain-based platform for verifying the real-name identities of China's 1.4 billion citizens. The system aims to provide a form of "pseudo-anonymity," allowing users to register and log in to websites using DID addresses and private keys, thereby hiding their real identities from other users and enterprises. However, according to a report by CoinDesk, China can still link these digital identities to real individuals when necessary.

Blockchain to Support China's Foreign Cooperation Initiatives

On March 30, 2024, China launched a key national research and development program for an ultra-large-scale blockchain infrastructure platform, part of a global strategy to expand its economic and political influence by improving trade routes and infrastructure in Asia, Europe, and Africa.

The project includes the "Information Silk Road," a digital dimension composed of deep-sea internet cables and satellites. This digital infrastructure, combined with real-world foreign cooperation schemes, lays the foundation for advanced software services, including blockchain applications. Research by Wolfgang Lehmacher published in Port Technology International magazine shows that the fusion of physical and digital elements will build a comprehensive land, sea, and air connectivity system, potentially revolutionizing global trade and economic cooperation.

Douglas McCalmont, an anti-financial crime expert, wrote in a LinkedIn article: "Now is the time to view geopolitics through the lens of blockchain technology." He pointed out that "China will soon maintain a robust and closed global (parallel) economic system to challenge everything associated with the United States."

Blockchain Drives the Modernization of Chinese Agriculture

The Ministry of Agriculture and Rural Affairs of China issued guidance encouraging social capital to invest in agricultural science and technology innovation enterprises, with a focus on supporting research into key agricultural technologies and the promotion of blockchain applications.

The agricultural sector has implemented a blockchain-based social credit system in rural areas. According to a study in the journal Big Data & Society, Qingyuan City in Guangdong Province introduced a blockchain system called "Persimmon Points" in 2020, allowing participants to earn points for "positive actions" and lose points for "negative behaviors," with all data transparently recorded on a public blockchain.

Another example is the GoGoChicken project, a collaboration between local authorities and a blockchain technology company, which uses blockchain and IoT devices to record and monitor the entire chicken production process from farming to sales. The project is positioned as a poverty alleviation tool targeting urban consumers concerned about food safety, who are willing to pay higher prices for traceable food. However, an article in the journal Big Data & Society questioned the impact of this project on farmers' data control and empowerment. The study argued that "blockchain reinforces data extraction and exploitation, enabling enterprises to access and control information belonging to vulnerable groups to a greater extent."

US Response to China's Blockchain Progress

China's rapid development in blockchain technology has raised concerns in the United States and spurred legislative action. According to a report by CoinDesk, in November 2023, US legislators proposed the CLARITY Act, which proposes to prohibit federal government officials from conducting business with Chinese blockchain companies and ban the use of Chinese blockchain networks. The bill prohibits transactions with companies such as iFinex (Tether's parent company), Spartan Network, and Conflux Network, aiming to prevent foreign entities from accessing national security intelligence and personal information. The bill also requires US agencies to develop plans to address risks arising from Chinese blockchain technology.

Blockchain Strategy

China's strategy regarding blockchain technology demonstrates a duality. Mainland China has banned the use of global crypto networks while simultaneously developing and promoting next-generation monetary technologies that provide the state with greater control. Meanwhile, leveraging the special administrative status of Hong Kong as a financial gateway, China can secure a place in the global crypto market. This two-pronged strategy allows China to fully utilize the potential of blockchain while maintaining strict control over the mainland's financial system.

As Ben Schreckinger stated in an article in Politico magazine, this strategy enables China to "impose internal financial controls on the mainland, prevent capital outflows, and bet on the potential of global crypto networks to disrupt currency and finance." Schreckinger further pointed out: "China will be able to have the world's most populous and second-largest economy run on a financial network it designs and controls (and pushes trade partners to join), while not abandoning its ambition to be part of the global crypto network."

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