President Xi calls for the development of blockchain technologies
October 29, 2019 Category IT & Telecom, Weekly
President Xi Jinping has highlighted the importance of blockchain in enabling independent innovation in core technologies, urging efforts to expedite the growth of blockchain technologies and industries. He made the remarks as he presided over a group study session of the Political Bureau of the Chinese Communist Party (CCP) on the development blockchain technology. It is important to strengthen basic research and improve original innovation capacities so that China can take the lead in theoretical studies, secure the high ground in innovations and develop a new edge in industries, Xi said. Blockchain is a digital ledger system that uses sophisticated cryptographic techniques to create a permanent, unchangeable and transparent record of exchanges to trace transactions.
An industrial ecology for blockchain must be established, and the integration between blockchain and cutting-edge technologies, such as artificial intelligence (AI), big data and the Internet of Things (IoT), must be pushed forward, President Xi said. Integration between blockchain and the real economy must be moved forward, which can offer solutions to difficulties faced by small and medium-sized enterprises in financing as well as challenges for banks and regulatory departments in risk control and oversight, he said.
Separately, Tencent Holdings has acknowledged that Facebook’s proposed cryptocurrency Libra could pose a serious threat to existing digital payment systems, including its own WeChat Pay as well as Alipay from rival Alibaba Group Holding. “Libra, if launched successfully, would not only impact traditional financial institutions but also undermine internet firms, including Tencent and Alibaba, which have their own relatively mature payment systems, hindering their global expansion,” Tencent said in a blockchain whitepaper. Facebook unveiled its Libra cryptocurrency in June, aiming to peg it to a basket of currencies backed by reserves, subject to regulatory approval. Facebook has 2.7 billion users on its social media platform as well as the backing of global payment, technology, telecommunication, blockchain and venture capital firms for the plan.
The potential global user base for Libra and wide-ranging services offered by its backers would affect the global expansion of digital payment companies who are not part of the Libra club, the white paper states.
Tencent operates China’s dominant social media and do-everything app WeChat with over 1 billion daily active users, and its WeChat Pay is one of the biggest digital payment services alongside Alibaba’s Alipay. Describing the plan as “radical and bold” but actually “clear-headed and prudent”, Tencent said Libra’s strategy is to start with developing countries with weak financial infrastructure, especially those without easy access to credit, and then gradually penetrate developed markets. Libra could reset the global payments and financial landscape by bringing innovations in user experience, technology and business models, Tencent said in the white paper.
Meanwhile China is developing plans for its own digital currency and was “almost ready” to launch, according to the People’s Bank of China (PBOC) in August. However, Governor Yi Gang poured cold water on prospects for an imminent launch last month, saying the central bank did not “have a timetable”. The PBOC plans to make digital coins available through four state-owned banks, as well as online payment platforms operated by Tencent, China UnionPay and Alibaba affiliate Ant Financial. China is the first major economy to explore launching its own digital currency and established a PBOC-backed research institute to study the field in 2016, yet it has banned all cryptocurrency trading activities and initial coin offerings since 2017.
Both Alipay and WeChat Pay have issued statements separately earlier this month making clear their current policies which forbid transactions related to cryptocurrency trading on their payment platforms. “To reiterate, Alipay closely monitors over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations,” Alipay said. “If any transactions are identified as being related to bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services,” the South China Morning Post reports.
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