China’s government is working to create a blockchain network infrastructure to boost international trade.
China Connects Global Trade with Blockchain. The project, led by Conflux Network, is named “Ultra-large-scale blockchain infrastructure platform for the Belt and Road initiative.” The Asian country launched the Belt and Road project ten years ago to connect by land and sea several continents.
China Blockchain Network
Recently, the Shanghai Tree-Graph Research Institute, created by Conflux, met with different government authorities in China to evaluate the plan to launch and implement the project. The project goal is to serve as a basis for developing transnational applications related to economics, trade, and culture, as the following announcement explains.
The Belt and Road initiative establishes a large-scale trade and economic cooperation framework to connect China with countries in Asia, Europe, the Middle East, and Africa through land and sea corridors. China has made multiple investments, projects, and agreements under the framework. The initiative accumulates $1 trillion in loans and investments in infrastructure, trade, technology, and other areas made by China in more than 150 countries.
In this regard, Conflux Network, which defines itself as a hybrid PoW/PoS blockchain without barriers, will guide the creation of the Chinese cross-border blockchain platform. Conflux is China’s sole public blockchain network that adheres to the local regulatory framework. In early 2023, it teamed up with China Telecom to launch a SIM card that allows users to manage and store public and private keys of their cryptocurrencies.
YES to Blockchain, NO for Cryptocurrencies
Despite a public ban on cryptocurrency trading in the country, China received $86.4 billion in cryptocurrencies between July 2022 and June 2023, according to Chainalysis. Hong Kong, the main driver of crypto activity in East Asia, plays a critical role in China’s cryptocurrency industry. In contrast, publicly, China maintains a much friendlier approach to blockchain technology. In 2019, Chinese President Xi Jinping called for an accelerated adoption of a blockchain policy, as he sees it as a crucial technology to boost the country’s industries.
They unveiled a National Blockchain Innovation Center in early 2023 created to foster talent development, research, recruitment, and training as part of their blockchain policy. Similarly, Shanghai wants to build a digital blockchain infrastructure by 2025, connecting with Hong Kong and Singapore regarding digital assets.
China and Cryptocurrencies
China has had an ambivalent relationship with cryptocurrencies. On the one hand, it has been a country with a lot of activity related to cryptocurrency mining, especially due to the availability of cheap electricity in certain regions. However, the Chinese government has generally taken an increasingly restrictive stance towards cryptocurrencies.
In September 2017, China banned Initial Coin Offerings (ICOs), citing concerns about financial stability and the risk of fraud. Subsequently, in May 2021, Chinese authorities stepped up their crackdown on cryptocurrencies, banning financial services related to cryptocurrency trading and restricting mining activity in several provinces across the country, citing concerns about energy consumption and financial speculation.
These regulatory actions have had a significant impact on the cryptocurrency market. China is also developing its state-backed digital currency, the digital yuan, to modernize its financial system and maintain control over currency issuance. In short, China has taken an ambivalent stance toward cryptocurrencies, seeking to restrict their speculative use while developing its digital currency.