China Plans to Use Blockchain for a Unified National Data Infrastructure
Blockchain technology, encryption, and smart contracts could play a key role in forming a trusted data circulation system as part of China’s ambitious national digital infrastructure plans.
China has proposed utilizing blockchain and smart contracts to achieve its new goals, with recent guidance highlighting blockchain as a central element of its future initiatives. According to the newly released “Guidelines for the Construction of National Infrastructure” by China’s National Development and Reform Commission (NDRC), the country aims to pilot several data infrastructure technology projects by 2029.
Specifically, the goal is to create a unified and reliable infrastructure for data assets and transaction certificates, with applications including digital identity, data traceability, privacy, and security.
Zhulin Shen, deputy director of the National Data Administration, explained in a press briefing that this data infrastructure initiative could attract about 400 billion yuan (roughly $54.5 billion) in annual investments over the next five years.
The guidelines also encourage “industries and local governments” to begin developing new technological infrastructure, such as blockchain networks and privacy-protecting computing platforms.
Blockchain is not a new concept in China, as the country has increasingly turned to it for its Belt and Road Initiative and for trade and economic collaborations among BRICS member states.
China’s Stance on Crypto
Since 2017, China has been clear about its anti-crypto, pro-blockchain stance. Despite being home to one of the largest Bitcoin mining companies globally, Bitmain, which produces the Antminer, the government banned all crypto-related activities in 2021.
A recent legal ruling clarified that individuals are not prohibited from holding crypto. However, commercial and business activities related to crypto, such as initial coin offerings (ICOs), trading, and mining, remain illegal.
Although Bitmain announced it would cease its operations following the 2021 ban, the company is still in business. It remains unclear how firms like Bitmain continue to operate, but many individuals in China are finding alternative ways to engage in crypto trading.
Research from Chainalysis shows that Chinese over-the-counter (OTC) trading desks have continued to grow, with nearly $50 billion in transactions in Q1 and Q2 of 2024.
Crypto remains extremely popular in China, and Hong Kong’s recent push to adopt crypto, including approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in 2024, could prompt a shift in policy in the mainland. However, this shift seems unlikely at the moment.
As more BRICS members introduce cryptocurrency regulations and infrastructure, China may eventually reconsider its position, but only if it aligns with the broader objectives of BRICS and China.
