Blockchain is set to usher in a new phase in the China growth story that could open up a “new chapter on the integration of governance and technology”.
Those were the words of Mu Rongping, the director of the
innovation and development research centre at the Chinese Academy of Sciences,
speaking at the first international blockchain
conference in the country.
Governance is rising up the agenda to find itself at the centre of China’s blockchain plans, not just to increase efficiencies and transparency but to enforce greater control from the centre.
The widely reported speech in October by president Xi Jinping to key Politburo members has set off a race across the country by corporations, public administrators, state companies and party cadres, to get up to speed with distributed ledger technology across the country.
There are now 500 blockchain projects registered with the
Cyberspace Administration of China. The bulk of them are from China’s homegrown
tech giants , Alibaba, Tencent and Baidu, as well as those from state bodies.
Blockchain to roll out for China’s governance
China’s People’s Daily newspaper in a recent website editorial
stated: “officials and party cadres must understand that the top leadership
attaches high importance to blockchain technology due to the prospects of its
application in the real economy, people’s livelihood and the state governance”.
A renewed clampdown on cryptocurrency trading and exchanges has
come precisely because of the enthusiasm from the top for blockchain adoption.
And it isn’t just all talk.
According to the South
China Morning Post the city of Deqing has become the first in the country
to host an international blockchain conference.
Many of China’s most influential scientists and
administrators were in attendance.
One such was Chen Jing, a researcher with the Beijing-based
Fengyun Institute of Science, Technology and Strategy, who told attendees: “While
officials are eager to embrace innovation and companies are keen to develop
solutions to satisfy the needs of governments, we’ll probably see wider
applications in governance in the coming years…”
However, he added the important caveat “…if the technology
turns out to be reliable”.
Blockchain application in finance, manufacturing and public sector
Nevertheless, China is already seeing the practical
application of the technology in diverse industries, notably finance, manufacturing
and public sector organisations, according to president Xi.
The smart city of Xiongan is deploying the technology, where
it has become “an important infrastructure”.
It is being used in the legal system by prosecutors with a
cloud-based e-proof system.
Law enforcement and intelligence agencies are using
blockchain to stop leaks. A researcher at the Academy of Sciences said that it
was even being used to appraise the work of key party members said: “From data
clues in e-governance systems, we make judgments on whether a party member’s
faith is fading, or if his enthusiasm at work is running low.”
All this is good news for blockchain in general. However, in
the China context, improving governance is also about control. The transparency
and immutability of blockchain tech is ideal for fighting corruption but if the
blockchain’s are supervised from the centre, then it would be open to abuse.
Mu from the innovation centre at the Academy of Sciences, also
emphasised that blockchain will be central to governance in China going forward.
“The potential is
huge for the use of new technologies, such as in areas of public security,
public transport, crime investigation and anti-corruption campaigns,” he insists.
Fighting corruption with blockchain – there will be push back
But there will be push back from those in the provinces who
might fear more efficient oversight disrupting corrupt practices.
China’s 13th five-year plan comes to an end in
2020 and its stated aim was to leverage technologies such as artificial intelligence
and blockchain to gain a “strategic technological advantage” reports the SCMP.
The chief competitor China’s policymakers have in mind is
the US. Trillions of dollars are at stake.
Zeng Liaoyuan, a professor at the University of Electronic
Science and Technology of China, hat although blockchain for governance is at
an early stage, he says “the speech from the top leader will boost interest in
the area as well as the huge potential of a market that could be worth
trillions of yuan”.