China missed out on the first few rounds of internet development. When companies like Google and Facebook started to dominate the world’s technology space, China was still playing catchup.
In recent years, however, the country has been trying to establish itself as a global leader in emerging technologies and innovation. Blockchain, of course, is part of that ambition. China is trying to make sure its companies are baked into blockchain at the start not only in its own market, but others as well.
China convened ministerial-level officials from countries including Singapore, Malaysia, Indonesia, Russia, and Kazakhstan at the International Cooperation Forum on Digital Economy and Blockchain in the Hainan Free Trade Zone last Thursday.
“Blockchain technology must align with the Belt and Road Initiative. It must serve the cross-border exchange in data and e-commerce between China and other countries, and facilitate the flow of physical goods, money, technology, as well as talent,” said Shan Zhiguang, director of the informatization and industry development department at the State Information Center, at the forum.
On the same day, Chinese officials announced a deal for exiled Chinese blockchain exchange Huobi—one of the forum’s organizers—to develop blockchain finance in a few BRI countries and the formation of a new blockchain cooperation forum with a smattering of BRI members including Indonesia, Uzbekistan, and Gibraltar. Huobi was founded in China but moved to Singapore in response to a ban on crypto exchanges; it has recently set up an office in Hainan under relaxed regulations.
Blockchain recently got a boost after Xi Jinping mentioned the technology in late October, which paved the way for a series of government initiatives, including a new cryptography law and trade finance blockchain partnerships with major banks.
China’s blockchain bid is not about just market share: as infrastructure and regulatory frameworks around the emerging technology take shape, having a seat at the table is important.
Huobi took on a semi-official role in the forum, with founder Li Lin appearing on stage with officials from BRI countries. Li said that the company saw a need for underlying infrastructure that can work across countries and regions despite differing policies and regulations. This led the company to develop Huobi Chain, its public blockchain network, and to join international cooperation efforts, he said. “But this does not mean we represent the Chinese government in any way to promote Belt and Road Initiative and compete with the US. We don’t have that capability or the responsibility to carry out this mission,” said Li.
Blockchain’s promise to improve cost, efficiency, and transparency of business and administrative processes make it especially appealing for developing nations as they undergo digital transformation. In Thailand, blockchain is being used for cross-border transactions and for preserving land deeds. Singapore, the financial hub of Asia, has rolled out regulatory efforts, including a sandbox program for fintech and blockchain startups, and experimented with the tokenization of corporate bonds.
At the forum, attending BRI officials expressed openness to cooperation. Many countries, including financial centers like Singapore as well as emerging economies like Indonesia and Malaysia, boasted of existing collaboration with the Chinese government and financial institutions—and argued for more.
Tapping into markets like Singapore, said Chia Hock Lai, president of Singapore Fintech Association, can give Chinese blockchain companies a launchpad into Southeast Asia, because in terms of established network infrastructure and financial regulatory framework.
“On the state enterprise level, we are working with a lot of Chinese banks that are available in Labuan with regards to digital currencies,” said Farah Jaafar-Crossby, CEO of Labuan International Business and Financial Centre (IBFC). IBFC is a Malaysian special economic zone on the island of Labuan. Jaafar-Crossby said collaboration in finance and technology with China has already started. Labuan has already licensed its first digital banking license to China Construction Bank, said Jaafar-Crossby, who said the deal will help finance all BRI infrastructure, business, and projects in the region.
However, details are scarce on how countries will implement the newly signed agreement, Li said at the press conference following the panel discussion on international collaboration.
“We are working on developing the underlying infrastructure [for blockchain services]. We have come to realize that every country’s looking to leverage blockchain in different ways. However, what these countries have in common is they hope to venture beyond blockchain applications in the financial sector,” said Li.