China Writes Blockchain Technology and CDBCs into Nation’s Future
- China’s new five-year plan for 2021–2025 will pour extra resources into the new digital infrastructure, including Blockchain technologies.
- Central Bank Digital Currencies (CBDCs) are gaining priority.
- Blockchain Technology is considered the future for China.
- Blockchain becomes the central part of the new digital infrastructure.
For the very first time throughout the entirety of its history, the words “blockchain”, as well as “digital currency”, have been written into China’s blueprint for the next five-year development plan. In fact, you’d be surprised to hear that the National People’s Congress actually published the 14th five-year plan, which is the guiding document for the country’s future social development as well as economic growth.
Tsinghua University, one of the best universities in China, Blockchain Service Network (BSN), a national, blockchain-based platform project, and the Huobi Research Institute, successfully released “The Blockchain Industry in China-2020 Annual Report”.
Why is this important? This examined some of the biggest developments that came of blockchain throughout the past year and even manage to predict the future of blockchain and digital currency as a whole in China.
Planning Digital Transformation Ahead
Quite possibly one of the biggest deals of the decade is the fact that, for the very first time, blockchain is mentioned in China’s five-year plan. This covers the years from 2021 to 2025 and has an entire chapter on digital transformation in every sector throughout Chinese society, ranging from actual, real-world industries all the way to governmental administration.
There’s this chapter known as “Accelerating digitalization development and building a digital China”, where the government pledges to strengthen the innovative applications of key digital technologies and even advance digital intronization. The key takeaway here is the fact that they mention the term “blockchain technology’ for the first time.
If you’re curious as to what the exact words on the document are, these are “We will foster and strengthen emerging digital industries, such as AI, big data, blockchain technology, cloud computing, and cybersecurity”.
If we take a deeper look, the chapter points to China’s blockchain technology targets throughout the next five years. This includes the further development of smart contracts, multiple-consensus algorithms, and even asymmetric encryption alongside distributed fault-tolerance mechanisms.
This plan even describes the application of blockchain in China throughout its development as this service platform through the usage of consortium blockchain for fintech, as well as supply-chain management, governmental affairs, and other fields.
Building the Digital Infrastructure
China is primarily planning to build a new infrastructure that can facilitate the nation’s digital transformation, as well as intelligent upgrading and technology innovations.
This infrastructure doesn’t mean railroads, airports, or other physical things, but instead, it refers to the tools, facilities, processes, and technologies that support the creation, usage, sharing, and even storing of information.
In fact, in April of 2020, the National Development and Reform Commission clarified this scope of technologies that facilitates the new infrastructure. Here, blockchain is officially named as part of it, alongside 5G, AI, and Cloud Computing, which is quite impressive.
However, blockchain stands out here because its utilization is not as clear as the others. For example, 5G is used to achieve more speedy broadband cellular networks, while on the blockchain, they only wrote that it is a technology that could be combined with other technologies to create new applications.
The annual report also summarized the policies and planned to foster the new infrastructure development, which would be the case for 10 provinces. These even include Guangdong, Chongqing, Beijing, and Shanghai. It even claims that by the year 2022, the Guangdong provincial government has plans of investing 666 billion yuan, converted to USD resulting in $102 million, on the new infrastructure.
The youngest municipality located in China, known as Chongqing, plans to invest 398 billion yuan or USD 61 billion by then as well. In comparison, Shanghai plans to invest 270 billion yuan or USD 41 billion.
How Blockchain Can Facilitate Governmental Affairs
Another interesting topic is the improvement and development of digital government, which is a core goal. China even aims to build smart cities and establish national public-data resource systems that can ensure the security of public data and enable the sharing of it across governmental departments, management levels, and even regions.
According to the report, over 60 blockchain-based governmental affairs applications were used throughout 2020, including administrative approval, electronic licensing, and judicial services.
China Keeps Working on The CBDC Program
China’s 14th five-year plan includes the development of the Digital Yuan, where the goal is “Digital Currency, Electronic Payment” (DCEP). In fact, the chapter “Comprehensively deepen financial reform and build a high-level socialist economy market” mentions digital currency once, stating that China has the potential of steadily advancing research and development of digital currencies.
Digital and crypto banking are becoming increasingly popular worldwide, and many governments have announced plans and trials of the DCEP.
Beijing even announced its municipal-level, five-year plan that would build a number of digital-economy applications that can be tested in the urban sub-centers, including Daxing International Airport and the Winter Olympics Park.
According to the annual report, over 48 central bank intuitions around the world have actually carried out CBDC research or proofs of concepts, and some have even tested retail CBDCs projects. This leads to the prediction that research and implementation of Central Bank Digital Currencies will continue to be a hot topic for years to come.
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