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Thursday, Oct 29, 2020

Chinese President Xi Jinping calls for more research, investment into blockchain technology

Greater effort should be made to strengthen basic research and boost innovation capacity,’ leader tells Communist Party’s elite. Technology can be used to ‘empower industries, increase efficiency and lower costs’, industry expert says

Chinese President Xi Jinping has appealed for greater urgency in the development of blockchain technology in a move analysts say could open up a new front in the country’s growing rivalry with the United States.

As general secretary of the Communist Party of China Central Committee, Xi chaired a meeting on the subject with senior cadres.

Blockchain would play “an important role in the next round of technological innovation and industrial transformation”, Xinhua quoted him as saying at a group study session for members of the Politburo on Thursday.

As such it should be made a key part of the country’s innovation programme, and investment in the sector should be increased, he said.

“Major countries are stepping up their efforts to plan the development of blockchain technology. Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative and industrial aspects of this emerging field.”

Xi said blockchain technology could be applied to many different fields, including finance, education, employment, elderly care, poverty alleviation, health care and food security, infrastructure management and public services.

Blockchain is a form of encrypted ledger. With each transaction, the chain grows but all previous records are stored and are verifiable.

Jenny Yang, the founder of BlockGlobe – a portal for news on blockchain and related sectors – said the technology could be used, for instance, to provide evidence of a company’s business operations, which in turn could help it to secure financing and reduce the risks faced by lenders.

The technology behind such “immutable records” is already being used to track and trace the supply of food – from farm to store – by simply scanning a quick-response code.

“The technology could empower industries, increase their efficiency and lower their costs,” Yang said.

A number of developers in China are working on creating the basic blockchain solutions for different industries, and according to a report by The Financial Times, Chinese companies have filed more patents on blockchain than anywhere else in the world.

Xi said China should step up the standardisation of blockchain to increase its influence and “rule-making power” in the global arena.

“Just like the Belt and Road Initiative’s railways and power grids, and Huawei’s 5G telecommunications networks, standardised blockchain solutions are a kind of basic infrastructure for future global economic activities,” Yang said.

“When Europe, Asia, even the US, have to turn to the Chinese for such solutions, there might be more Huaweis emerging.”
The US and China are already engaged in a tech war over companies like Huawei, and any advancement of China’s expertise in blockchain could open up a new front in the conflict, analysts said.

Meng Yan, deputy head of the of Chinese Institute of Digital Assets, said Xi’s remarks could spark a race to become the global leader in the digital economy.

“We are in the middle of a digital arms race,” he said in a recent article.

At the Politburo meeting Xi did not mention cryptocurrency – the best known application of blockchain technology. China has banned bitcoin and all other cryptocurrencies.

But the issue should be of interest to Beijing’s policymakers, especially with Facebook’s planned launch of its Libra digital currency next year. Were it to take off on a global scale there would be very little room for China to launch a rival, Yang said.

“Money issuance, even on the internet, is a matter of state sovereignty. China cannot afford to concede or lose,” she said.

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