Observation | Why can China lead in the blockchain innovation competition?

The United States has always been a pioneer in Internet technology and has dominated the Internet technology field, but China has established itself in the second place. Chinese companies such as Tencent, Alibaba, Weibo, Baidu, and Bytedance are competing with large US technology companies such as Google, Amazon and Facebook. With the support of Chinese government policies, the localization of content and technology is a major factor in the market value of these platforms in China.
However, in the emerging blockchain technology sector, China has established itself as a global leader, surpassing the United States. Leadership in this area has become a reality through government initiatives and private sector concerns about blockchain.

Chinese government actively participates in blockchain technology

China has become one of the first countries to recognize the potential of blockchain technology. The 13th Five-Year Plan (2016-2020) mentions:

"IoT, cloud computing, big data, artificial intelligence, machine deep learning, blockchain, bio-gene engineering and other new technologies drive the cyberspace to evolve from the Internet of Everyone to the Internet of Everything. Digital, networked and intelligent services will have nowhere. No."

Even in terms of foreign policy, China is actively exploring cooperation with the UK and Central Europe in the area of ​​blockchain.

In addition to strategic policy initiatives, the Chinese government is also concerned about the functional aspects of the blockchain. Chinese government agencies have taken the lead in understanding blockchain projects at the public and corporate levels. China Information Industry Development Center regularly publishes major public chain technology evaluation indexes and rankings such as Bitcoin, EOS and Ethereum. The evaluation of these projects is based on their basic skills, applicability and creativity.

In addition, starting in 2017, the government-approved China Electronics Standardization Institute (CESI) began testing the functional function of the standard blockchain system to verify the robustness of the top blockchain projects operating in China. The certification process is very rigorous and based on a wide range of guiding principles, taking into account the emerging nature of blockchain technology, which are very useful in unmanageable environments. Currently, only 30 projects have been certified. Certification is voluntary and not mandatory, but it is quite credible in the blockchain community.

Another ambitious plan of the Chinese government is to issue its own national digital currency. A senior official of the People's Bank of China (PBOC) said last month that the bank is preparing to issue a new digital currency. The Chinese government has been involved in the project since 2014. PBOC currently has more than 40 patents related to digital currency.

The Libra cryptocurrency project announcement released by Facebook in June seems to have affected the central bank's expansion of its digital currency distribution. Similar to Libra, China's digital currency is also expected to be fully supported by reserves.

Chinese companies are rapidly adopting blockchain technology

Driven by the government, Chinese companies are also leading the way in R&D and adoption of blockchain technology, and their adoption rate exceeds that of US counterparts.

The Deloitte blockchain survey of 2019 shows:

  • 73% of Chinese respondents view the blockchain as the five strategic priorities, compared with 56% in the US.

Similarly, in the Deloitte 2018 survey:

  • Forty-nine percent of Chinese respondents said their organizations have used blockchain technology, compared with 14% in the US.
  • 86% of Chinese respondents are currently investing in employees with blockchain experience, compared with only 14% in the US.

China's blockchain industry is booming and its industrial structure is diversified. According to data from Beijing data service provider Blockdata, China leads the world in the launch of new blockchain projects. As of November 2018, 263 projects are in progress, accounting for 25% of the global market.

A white paper issued by the Ministry of Industry of China in May 2015 pointed out that the blockchain is used in China across a wide range of industries, from hardware manufacturing, platform and security services, application services, investment, media and human resources services. The company has adopted blockchain technology.

China has become a global leader in blockchain research, as evidenced by the number of patent applications. The number of blockchain patents applied for by China ranks first in the world. According to Reality Shares' survey, as of August 2019, the number of patents related to blockchain (1,338) applied by Chinese listed companies was nearly three times that of US companies (442) and German companies (44).

The number of blockchain patents owned by Chinese companies accounts for 68% of the global patent applications. The top three companies in the world – Alibaba (380), China United Network Communications (168) and Ping An Insurance (163) – are Chinese companies, and the fourth-ranked IBM (146) is based in the United States. See below:

Similarly, seven of the top ten companies in the world in blockchain patents are Chinese companies. The top ten companies in the blockchain related patents are:

Reality Shares believes that blockchain technology has great potential to change the way global businesses operate, and China has clearly become a leader in this field.

Author | Nasdaq
Edit | Summer
Source | Unitimes