China’s ‘two sessions’: first mention of blockchain in five-year plan boosts still-nascent industry

Coco Feng
·4-min read

Blockchain, the technology that enables the creation of a shared and cryptographically-secured digital ledger, was mentioned for the first time in a draft of China’s national five-year plan, the latest of which was approved by the top legislature at the conclusion of its annual meeting on Thursday, although the final version has yet to be made public.

Coming in the form of a lengthy document that is long on big ideas and short on specifics, the 14th five-year plan lays out the broad goals that the country aims to work towards in the next half-decade and beyond.

Under the five-year plan and the Vision 2035 development strategy, also unveiled during this year’s “two sessions”, technology will play an increasingly large role in China’s top-down planning. The digital economy is expected to contribute a greater portion of the country’s GDP; increased technology integration will transform China into a global leader in advanced manufacturing; and cutting-edge technologies, including artificial intelligence, big data, cloud computing and blockchain, will become part of everyday life in China.

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What blockchain is, how it works and how China will lead the world

While China bans the trading of cryptocurrencies, which is supported by blockchain, Beijing has been keen to shore up the use of the technology in other areas. In the run-up to this month’s “two sessions”, more than 20 provinces and municipalities mentioned blockchain in their work reports for this year.

“The inclusion of blockchain in the 14th five-year plan will do good for the development of both the industry and the professionals, and, in a broader sense, will grow the digital economy to a higher quality level,” said Gao Chengshi, a cryptography expert and a founding partner of blockchain developer Shanghai Hashvalue Information Technology.

The move “may push forward the establishment of more industry standards and improve regulation,” according to James Wang and Catherine Hong, analysts at IDC. The market research firm forecasts that spending on blockchain in China will grow at an annual rate of nearly 52 per cent, reaching nearly US$2.3 billion by 2024.

The new five-year plan marks China’s biggest political push for blockchain since 2019, when President Xi Jinping endorsed the technology at a group study session for Politburo members. Blockchain, he said, would play “an important role in the next round of technological innovation and industrial transformation”.

Xi’s comment spurred the launch of a national blockchain infrastructure project called the Blockchain Service Network (BSN), which serves as an “internet for blockchain”. Some local governments said they have already applied it to their administrative work.

While cryptocurrencies are built on blockchain, they are just one example of what the technology is capable of. Designed as a permanent log of records that is difficult to alter without being detected, it enables governments, businesses and other institutions to improve supervision and monitoring, as well as data sharing and management.

Xiong’an New Area, the future city project just outside Beijing that is personally backed by Xi, launched in December a city-level blockchain system used to issue and record resettlement compensation, salaries for migrant workers and the purchase of construction materials.

During the Covid-19 pandemic last year, the southern Chinese province of Guangdong and neighbouring Macau launched a mutually recognised QR health code system powered by blockchain. The previous year, some Guangdong government agencies started to issue blockchain-powered invoices.

An aerial photo taken on April 1, 2019 shows the scenery of Baiyangdian Lake in Xiong’an New Area, Hebei Province. Photo: Xinhua
An aerial photo taken on April 1, 2019 shows the scenery of Baiyangdian Lake in Xiong’an New Area, Hebei Province. Photo: Xinhua

Some companies are already eyeing the government’s growing embrace of blockchain.

Points, a Shanghai-based blockchain start-up, is working with Chinese financial institutions to bridge the gap between public and private data sharing, CEO Sarah Zhang said in an interview with the South China Morning Post earlier this year.

The company said it builds secure computation algorithms to allow for data sharing between organisations without actually exposing the data to partners. It uses blockchain to track and record the entire process, ensuring that all sides understand how their data is being used.

The use of blockchain could expand even faster as the negative impact of the coronavirus pandemic subsides in China, according to IDC analysts. The demand for higher safety in vaccine and cold-chain logistics, for example, can be met with blockchain technology, they said.

“Blockchain is mainly used in finance and administrative work. As developers explore more scenarios, it will play a valuable role in more areas such as health care, manufacturing and energy,” said IDC’s Wang and Hong.

This article China’s ‘two sessions’: first mention of blockchain in five-year plan boosts still-nascent industry first appeared on South China Morning Post

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