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China maintains a hostile position on cryptographic assets while expressing a more open mind when it comes to blockchain. Their decision-making process could have enormous geopolitical implications.
It is no secret that China was determined to dampen the cryptocurrency industry as it prepared to dominate the blockchain scene.
At the end of August, 124 websites operated by offshore cryptographic centers were closed. The move took place in the same period in which hotels and shopping centers were forbidden to host or promote events in support of virtual currency.
Last September, government officials banned all ICOs and told local exchanges to stop working. The Chinese cryptocurrency regulators have probably chosen a path that disagrees with much of the global community. Yet China's position on blockchain technology is very different.
A Great Strategy for Blockchain
In a May speech at the Chinese Academy of Sciences, President Xi Jinping announced the blockchain as part of the "new industrial revolution". Jingdata's summer report found that the project financing blockchain for January ($ 100 million) had already eclipsed funding allocations for the whole of 2016 ($ 70 million).
At the moment, officials and entities throughout the private sector, the national government, the local government and the academic world are all focused on projects related to the blockchain development
Only in the last month, the People's Bank of China (PBOC) claimed to support the establishment of a blockchain commercial finance platform, while the Supreme People's Court affirmed blockchain was approved to archive and verify digital evidence.
The Bank of China also hopes to use the blockchain to revise its cloud-based poverty reduction system. The goal is to make better efforts towards poor citizens in the Tibet Autonomous Region. If the effort is successful, the Bank hopes the same model can be replicated in other poor areas like Gansu and Yunan.
A number of experts and business leaders have also highlighted the importance of investing in blockchain. The CEO of Xunlei, Chen Lei, spoke in May of the importance of public investment in blockchain. In April, the city of Hangzhou announced plans to host a $ 1.6 billion blockchain fund to help technology development.
Blockchain's geopolitical ramifications
Overall, blockchain technology could take off across China due to fragmented logistics and supply chain systems. So far, a number of alleged solutions have failed to produce any kind of positive impact, which is why use cases for blockchain have become interesting
However, Chinese policies on blockchain and cryptocurrency could also be part of a larger – strategic geo-strategic strategy.
Despite maintaining a relatively open mind towards the blockchain, many Chinese companies in the sector maintain a low profile due to the ambiguity about compliance with government rules.
Although the government wants to release hard and fast blockchain standards by the end of 2019, some, such as PBOC's senior consultant Sheng Soncheng, insist that blockchain technology must stay away from the financial sector. Songchen states that the authority for the issue of currency should rest with the government.
Much of the success of the main Chinese companies like Alibaba is due to government protections that prevent American giants like Facebook from entering and upsetting the market [19659003] A former US government official mentioned in a speech how the stability and legitimacy of the Chinese Communist Party are based on strong GDP growth and low unemployment.
The use of cryptocurrency as a tool for international trade could limit the effectiveness of the Chinese currency exchange rate. This has the potential to damage the national export industry and, in turn, affect the ability of the national government to advance the country economically.
As a result, restrictions on nascent technologies such as cryptocurrency are put in place to protect government officials from any threats to their legitimacy or domination
What are your thoughts on China's blockchain strategy? ? Let us know in the comments below!
Images courtesy of bitcoinist archives, Shutterstock.
