The past week has seen various significant developments interms of how blockchain technologies will be perceived and developed in China.
On October 25, it was reported that Chinese President XiJinping had described the technology as an ‘important breakthrough’, with moredevelopments needed to accelerate the sector, as well as greater interoperabilitybetween blockchain technologies, artificial intelligence (AI), and the Internetof Things (IoT).
Xinhua, China’s state-run press agency, put it thisway. “Noting that China’s blockchain sector has a sound foundation, Xistressed expediting the development of blockchain technology andinnovation-driven industrial development. More efforts should be made to strengthenbasic research and boost innovation capacity to help China gain an edge intheories, innovation and industries of the emerging field.”
There was more to come. Reutersreported a Chinese central bank official who said commercial banks should ‘stepup their application of the technology to embrace digital finance’. Cryptocurrency-focusednews resource cnLedger noted thatarticles expressing concern over the validity of blockchain were being purged,while companies who had publicly claimed investment in the technology – cloud softwarefirm Xunlei was cited by cnLedger – saw serious market gains.
As reportedby the South China Morning Post, the Communications Industry Association proposedthat October 24 should become ‘blockchain day’, quoting a committee spokespersonwho said President Xi ‘blew the horn of progress for the future.’
This naturally makes a significant change from the country’sprevious stance. More than two years have passed sinceChina banned ICOs, while in August last year, as this publication put it,China’s ‘wider crackdown on activities related to digital money’ saw ablanket ban on more than 100 offshore cryptocurrency exchanges.
So what does this mean – and what should the industry lookfor?
While many stocks have gone up, analysts point to apotential downturn when it comes to crypto in China. TRON, which last week announcedits integration with Samsung’s Blockchain Keystore, surged 30% at the startof this week for instance, which did not go unnoticedby project CEO Justin Sun.
Bitcoin, however, is presumably in a safer position. As reportedby Decrypt, a ruling in July from Hangzhou’s Internet Court found thedigital currency can enjoy a legal status at the same level as physical assets.The case, albeit going against the plaintiff, saw the judge rule that Bitcoin –and crypto at large – should be considered ‘virtual Internet property’, inlegal terms.
Writing on Twitter, economist Alex Kruger argued the odds ofChina supporting public blockchains with tradeable tokens which can be used forspeculation and moving money out of China were ‘close to zero’. “China is notinterested in decentralisation but in control,” Kruger wrote.
This threat was noted by an anonymous ‘Bitcoin dissident’, asCoindesk put it, who warned of repercussions against a fully integratedblockchain-based financial system controlled by the Chinese government. “We doneed to think about ethics when it comes to these things,” they said. “If thevalue is something a totalitarian state can take hold of and use to track everysingle person and what they’re doing, enforcing the strictest currencycontrols, then this is what they are going to do.”
Following the president’s remarks, the state-run People’s Daily newspaper urged caution in a commentary piece. “Blockchain’s future is here but we must remain rational,” the commentary read. “The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.”
