It looks like China’s stance on blockchain has come full circle. As crypto prices soared last year, the Chinese state-run media machine was going full blast against anything related to cryptos. Blockchain was on their hitlist, but now it appears that the Chinese Communist Party is 100% behind Chinese-led blockchain development programs.
China’s People’s Daily publishing house released a book this week called, “Blockchain – A Guide for Officials”. The book is a primer on what blockchain is, and what it could mean for technological development in numerous areas. The People’s Daily stated that the goal of the book is to help Chinese Government officials learn about blockchain, but the subtext is abundantly clear; China is playing catch-up in a space they could have dominated outright.
The head of People’s Daily, Ye Zhenzhen, wrote in Blockchain – A Guide for Officials:
“The biggest impact of blockchain lies in its operation mechanism… which seeks to achieve consensus as a way to govern a community. It offers us a brand new angle to think about and resolve different problems.”
This is an interesting statement from one of the largest mouthpieces for official Chinese policy. China is in essence a one-party state that enforces their power with totalitarian means, and won’t allow much in the way of public dissent. DLT has already been used by Chinese citizens to expose corruption and dangerous practices that the Chinese government has attempted to cover up. As blockchain technology grows more popular, these features will become easier to use.
China May Not Have a Choice
In many ways, Hong Kong is an anachronism. The representative democracy that survived the handover to China is diametrically opposed to the top-down centrally-controlled political model that the Chinese Communist Party uses. The recent Umbrella Revolution is evidence of the growing pains that China is experiencing as it attempts to integrate a global finance hub into a political system that has changed markedly from the time of Mao and the Cultural Revolution.
Mao Zedong (Wikimedia Commons)
Today China is attempting to spread its economic reach from one end of Eurasia to the other, and new tech is already taking a lead role in the Belt and Road Initiative. The Hong Kong Monetary Authority (HKMA) recently announced they would be working with some of the largest banks in the world to bring a blockchain-based trade finance system online. The platform they are using was designed by the Ping An group, and is already in operation in mainland China.
The advantages that Ping-An’s platform creates for just about everyone in the supply chain are substantial. Not only are the major banks given a much higher level of oversight, smaller companies are able to access trade finance. The real issue for the Chinese Communist Party is that blockchain is inherently resistant to censorship, and once a record is created, it is nearly impossible to “cover it up.”
Major Advantages for Trade and Transparency
Late last month it came to light that Chinese internet censors were eliminating news about vaccines that were apparently unsafe. While the Chinese censors were able to get rid of any mentions of the toxic vaccines on the regular web and messaging platforms, an intelligent crypto user sent a 47 cent transfer with the entire news story attached to it. The censors couldn’t get rid of the story, and now it can be viewed by anyone who knows how to use cryptos.
Unsurprisingly major Chinese companies like Alibaba are looking into blockchain for securing chain-of-custody records. Chinese supply chains are highly vulnerable to counterfeiting. High end food items like Australian beef are routinely substituted with lower quality beef, and consumers are left with a product that no one knows much about. Blockchain tracking platforms can change all this, but with the transparency they create comes the inability for the state to step in and rewrite reality.
Given how fast blockchain platforms are being developed, it may be that the Chinese Communist Party didn’t decide to accept blockchain, they simply had no other choice. Resisting blockchain development will probably leave the stragglers at the mercy of those who make blockchain a priority. For the moment cryptos are still banned by the Chinese Communist Party, but like their stance on blockchain, that could change at any time.