China wants to be a front runner in blockchain technology even if the ban on bitcoin remains

PUBLISHED : Wednesday, 07 March, 2018, 8:07pm
UPDATED : Wednesday, 07 March, 2018, 9:33pm, the official website of the People’s Daily, has launched a section dedicated to blockchain coverage, signalling Beijing’s official endorsement of the technology, even as a crackdown on digital currencies began in September.

Stories related to blockchain as well as information on seminars and other industry-related events can be found under the site’s investment and start-up section.

The Chinese-language site said the editorial expansion was designed to “deliver good content, purify the industry environment and use blockchain technology to empower industries”.

Stories published on the site touched on the importance of the new technology, including one that carried the headline “China should be a front runner in the digital economy era”.

Analysts said mainland regulators would likely keep a tight grip on the blockchain sector, following recent moves to ban trading in bitcoin and other cryptocurrencies.

“China does not want to miss out on any big technology trend, as they invest big in artificial intelligence/machine learning since it is an obvious bet on the future and a relatively low hanging fruit,” said Spiros Margaris, a venture capitalist and adviser in the fintech industry.

“They will want to control who can participate and more importantly who can control it,” said Margaris.

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Blockchain is best known for being the technology behind bitcoin, by serving as an encrypted database of agreements that keeps both parties involved in a bitcoin transaction accountable.

Beijing-based People’s Daily, the biggest newspaper group in China with a circulation of around 3 million, is controlled by the Communist Party.

The newspaper is commonly referred to as the “mouthpiece” of the party, and is followed closely by investors and China watchers alike for insight into economic and political issues.

Blockchain technology saw its first official mention in China in 2016, when it was written into the 13th Five-Year Plan, a road map for China’s development in the five years from 2016 to 2020. Blockchain was depicted as one of the major tasks and projects for the nation, along with quantum communication, AI, and autonomous driving, according to the People’s Daily.

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“There is a very clear separation between digital currencies and blockchain in China at the moment, so it is likely we will see blockchain projects continue to develop,” said Zennon Kapron, a Shanghai-based managing director of Kapronasia, a financial consulting firm.

“But overseas investors should stay cautious, as it can be difficult to determine if blockchain-focused companies are fully compliant with government rules, without touching ‘sensitive areas’ like ICO and digital currencies,” he said.

Days before the launch of the channel, the People’s Daily published lengthy articles explaining the usage of blockchain, with stories headlined “Three key questions for understanding Blockchain”.

The article urged the government to roll out better infrastructure and legislation “to encourage the development of blockchain”.

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The warmer tone towards blockchain points to a dualism in official policy, as Beijing has been steadfast in efforts to quash bitcoin trading as part of a campaign to root out financial risks, especially high volatility markets that could leave investors with big losses.

In September, China ordered the closure of all cryptocurrency exchanges and pronounced all initial coin offerings (ICOs) illegal, marking the start of the official crackdown on the digital currency that saw a number of bitcoin traders relocate to other countries. Beijing said in February that it will block all domestic and overseas websites related to cryptocurrency trading and ICOs.