Why China Government is Focusing on Blockchain Business

Key Takes:

• President Xi Jinping makes public the political intention of exploring the Blockchain technology in the country 
• There have been other instances of Chinese political initiatives reflecting a keen interest in moving ahead in the innovation curve
• The tech race between the States and China explored  
• China’s current crypto market highlights
• The Economic impact of China’s initiatives 

From a previous ban on the trading of cryptocurrencies to now fully embracing the Blockchain technology on which crypto is based, China is full of surprises. 

President Xi Jinping steering the state towards Blockchain

In the afternoon of October the 24th 2019, The Political Bureau of the Central Committee of the Communist Party of China conducted their 18th Collective Study on the Status Quo and Trend of Blockchain technology development where Xi Jinping, General Secretary of the CPC Central Committee and the President of the country is reported to have stated, “We must take the Blockchain as an important breakthrough for independent innovation of core technologies, clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of Blockchain technology and industrial innovation.”

Other significant Political moves in China

This being a major indication of political actors of China taking a keen interest in Blockchain technology and its usages (which more often than not massively suggests cryptocurrency, being the single largest application of the Blockchain technology), there have also been other instances pointing at the same trend like the Guangzhou Government announcing a 140 Million Dollar subsidy fund to boost Blockchain enterprises. In this regard, Dovey Wan, founding partner at Primitive Crypto, tweets, “The plan is to selectively sponsor 2 projects every year, can be either public chain or federated chain projects.”

The US-China Economic Block Deepens?

As the News of Facebook’s Libra taking over the crypto market had hit the newsstands, it seemed that the States would leave the first major mark in mainstreaming cryptocurrency. This is now met with a major contender with China coming forward in the game too. The USA must now be on the alert for even though it seems quite improbable for a country addicted with centralized control to happily embrace and even promote a technology completely opposed to their centralized, tightly controlled political machinery, there are major indications that China may just make it work with crypto. There have also been reports of how the central Bank of the country has been developing a Central digital currency. Will the future of the world economy, all regulations and rules surrounding crypto be dictated by the US or China this time?

Some Blockchain Giants in China

Not only this the country has an extremely good scaffolding for the development of cryptocurrency ecosystems as evidenced by a mushrooming industry of Blockchain based businesses in China who are making massive strides in the country and beyond. There have been around 506 projects developing Blockchain technologies published by the Cyberspace Administration of China in consequence to the Government requiring such mandatory registrations. Some are like Pragmatic DLT, a software consultancy company focusing on the distributed ledger technologies, Bitmain is another giant offering products like chips, servers, cloud solutions for Blockchain and AI applicaions, another being Hyperchain providing technical products and application solutions of Blockchain since 2016. 

The Economic Influence

One of the immediate effects of the Chinese political proactivity in the crypto world was that the most popular cryptocurrency, Bitcoin which was trading at $7500 before the event of October 24 surged to $10,000 post the Jinping remarks. Similarly, the share value of some Blockchain-based companies saw a major rise with Xunlei reporting a 107% growth in its shares!

Now, the anticipated impact of this move by China on its economy and in turn on the Global economy is ridden with speculations. With its huge human capital, tactical phased development moved smoothly with the help of centralized control, China has grown to be a mammoth economy, to the extent that the USA is now threatened by it which is reflective in the policies imposed by the Trump administration. Add to this its governance backed Blockchain initiative and we have an unmatched booming economy with unprecedented transnational access. States that have remained outside the realm of Chinese influence or had felt only a little effect yet are now going to have full-blown trade with the Chinese market through the power of Cryptocurrency that renders borders transient. This will have the effect of having China’s presence where and in a way which hitherto was not imagined.   

Summing Up

China’s baby steps towards a crypto regime can’t be slighted away. This may have the effect of revolutionizing the entire global economy as we know it. China’s economic outreach has penetrated almost all the countries in the world as it is. Consequently, its rising interest towards the digital currency taking a clear shape of politically backed stances is projected to have an unparalleled impact.