China aims to lead on blockchain
May 29, 2018 Category China News Round-up, Weekly
China cannot miss out on being a front runner when it comes to blockchain, which could have huge implications for its economy, Chen Lei, Chief Executive of Xunlei, a U.S.-listed technology company, said at a conference on blockchain in Beijing. “I believe there will be a main blockchain that dominates the market,” Chen said during the conference, that was supported by China’s Ministry of Industry and Information Technology (MIIT). “I think China needs to encourage and invest in building one for the nation,” he said. Chen said U.S. companies had dominated the technology behind mobile operating systems, global position systems and microchips, and that it was important for Beijing to lead on blockchain.
At the conference, the Ministry launched a white paper detailing areas that China should focus on: the application of blockchain in industries such as trade finance, transaction settlement, insurance and securities, along with intellectual property, wealth management, big data, energy and health care. Zhang Lei, Founder and Chief Executive of start-up Yeecall, a messaging app that facilitates cross-border payments, said that companies should focus on areas supported by the government, and not on developments such as initial coin offerings (ICOs). China last year became the first country to ban ICOs, a form of crowdsourced fundraising by which companies exchange newly created cryptocurrencies, or tokens, for payments in an existing currency, which can be cash or, most often, an established cryptocurrency. The People’s Bank of China (PBOC) said about 90% of ICOs launched in China had been fraudulent. The government also shut down local exchanges for virtual currency trading, such as Okcoin and Huobi.
China has been a force to reckon with in the mining industry, but the government is also cracking down on this sector. Jihan Wu, co-founder of Bitmain, which operates one of the world’s biggest bitcoin mines, said that the company was expanding into the U.S. and was currently building mining facilities.
Venture capital funds on the other hand are more and more investing in blockchain. The government of Hangzhou is investing in a CNY10 billion fund, which claims to be the world’s biggest fund investing in blockchain projects. The fund is managed by Tulan and INBlockchain, a company founded by virtual currency entrepreneur Li Xiaolai, the South China Morning Post reports.
Over the next three years, the cutting-edge technology is expected to be widely integrated into sectors such as product traceability, copyright protection, bill verification, precision marketing, energy and healthcare, said Yu Jianing, Director of the Institute of Industrial Economics at the Ministry of Industry and Information Technology (MIIT). As of March, the number of blockchain tech companies in China exceeded 456. The year 2017 marked the peak year for blockchain development in China, with 178 new companies emerging in the sector. In December, the Standardization Administration approved a project to establish the country’s first national standard for blockchain technology. The standard is expected to be ready as soon as the end of 2019. It will cover operations and applications, processing and methodology, and information security, the China Daily added.
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