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It became increasingly evident during 2018 that Beijing wants its people to have absolutely nothing to do with digital currencies. However, that does not mean the People's Republic has shunned the underlying blockchain technology. In fact, quite the opposite is happening in China.
The China Banking Association (CBA) has now begun to roll out the long-awaited "China Trade and Finance Interbank Trading Blockchain Platform." It has been designed to standardize and digitize financial products and, according to the CBA, it also serves in "laying an important foundation for building a new trade finance ecosystem and improving the efficiency of financial services."
The project is entirely state-controlled, has been created to improve the security system, and can be viewed as a kind of evolution of the banking system. Distributed ledger, or blockchain, technology is fully encrypted and tamper-proof, which ensures immutability for banking transactions.
According to the CBA, 10 banks have tested the system and have achieved their goals successfully. China Banks Bank of China (ICBC), China Agricultural Bank, China Merchants Bank (CMB), China Everbank Bank, Shanghai Pudong Development Bank, China Postal Savings Bank, Ping An Bank, and HSBC. Two pilots for issuing letters of credit and asset-backed securities were completed by ICBC and CMB.
HSBC China vice president Fang Xiao told the local media the setting up of the interbank platform was "an extraordinary, opening up barriers between different banks and realizing the interflow of information." had become a "global trend" and HSBC Group's overseas blockchain trade pilots show that blockchain can be used "to improve the efficiency, safety and scale of trade."
Chinese fintech firms such as Beijing-based PeerSafe startups are providing technical support for the venture. The CBA said it would include more small and medium-sized banks in addition to customs and tax agencies in the future.
Other similar initiatives such as the Bay Area Trade Finance Blockchain Platform have been deployed in Shenzhen by the People's Bank of China. Hong Kong also announced the launch of a blockchain trade and finance platform in November last year.
Cryptocurrencies aside, blockchain is still big business in China and across Asia, where it is being increasingly deployed to upgrade dilapidated banking systems.
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