Depth | The next Singapore? Interpreting the Development Prospects of Hainan Blockchain from a Policy Perspective

The Hainan International Offshore Innovation and Entrepreneurship Demonstration Zone Construction and Blockchain · Digital Asset Trading Technology Innovation High-end Forum was held in Hainan on December 1. We have noticed that this conference should be the first related conference involving provincial and ministerial leaders following the recent domestic related policy events on digital asset trading and the blockchain industry, as well as the related industry trading platform as the initiator. The significance behind the conference is worth pondering.

Today, the long-term layout of the Hainan blockchain has just been unveiled; in the next few years, Hainan will become a battleground for blockchain strategists, and we also expect that policy + innovation will stir up a greater spark.

I. Hainan = Singapore, the future blockchain version?

In October 2018, the Hainan Pilot Free Trade Zone was established, and the central government granted Hainan not only the free trade zone, but also the first free trade port with Chinese characteristics. Free trade port is the highest level of openness in the world today. Taking Singapore as an example, its transportation hub zone has the inherent advantage of building a free trade port, and because of its freedom, it has established a very complete and powerful Port services, and the establishment of a public information platform to provide standardized solutions to facilitate trade, and also established its status as a financial center in Southeast Asia. Similarly, Hainan will start from the blockchain and use the central government ’s positioning as a pilot zone for Hainan ’s comprehensive deepening of reform and opening up. Hainan ’s “first try first” policy expectations are not available in other regions. The blockchain policy dividend in Hainan's innovation experiment is mainly based on the following three inherent advantages of Hainan:

First, establish standard legal compliance tests for blockchain development

Recently, the virtual currency market has been raging, and the regulatory crackdown has become increasingly rigorous. Many project parties have become irrelevant, mainly because blockchain compliance has not been standardized, and there are many gray spaces to test. Therefore, the government's decision to implement sandbox supervision in Hainan is of little significance to the entire industry. In the forum the day before, Meng Xiaosu, chairman of the China Asset Securitization Forum, said that in theory, all assets that can be asset securitized can be made into asset tokenization. Another term is "STO", and the government will also set up in Hainan. Digital currency asset securitization standards are in compliance with the requirements of the market. And Wang Lu, deputy governor of the People's Government of Hainan Province, also said that in the future, whether it is digital asset trading or compliance with various innovative ideas, it is expected that sandbox supervision will be carried out in Hainan in advance, and various types of currencies will be defined as Bitcoin and stablecoins. To standardize regulations.

Second, “One Belt of Water” with Guangdong-Hong Kong-Macao Greater Bay Area

From the perspective of the overall planning of the Guangdong-Hong Kong-Macao Greater Bay Area, the core areas actually created are actually not large. Zhuhai, Jiangmen, and some Jinwan areas are all "foreign places." Second, different cities in the Guangdong-Hong Kong-Macao Greater Bay Area. Taking advantage of corresponding resources and clear division of labor, the core lies in the synergy of diversified industries. Therefore, Hainan, as a close neighbor of the Guangdong-Hong Kong-Macao Greater Bay Area, can provide intensive resources such as talent, technology and capital for the Greater Bay Area. In addition, the Zhanjiang-Haikou high-speed rail is an important part of the “eight verticals” of the nation ’s high-speed rail, including the Baohai high-speed rail and the coastal high-speed rail in the Pan-Pearl Region. Theoretically, the Hainan Free Trade Zone can be docked with the Guangdong-Hong Kong-Macao Greater Bay Area in two aspects: First, the ecological tourism environment in Hainan can become a new space for the development of leisure tourism in the Guangdong-Hong Kong-Macao Greater Bay Area; second, Guangdong The Hong Kong and Macao Greater Bay Area is also a bay area for science and technology. It is particularly close to Hainan. Hainan can do more in terms of talent coordination and support.

Third, catch the blockchain air: a large number of companies settled in

As early as June 2017, Huobi has registered a company in Hainan. The company name is Huobi (Hainan) Digital Commodity Network Technology Co., Ltd. Li Lin is the legal representative and executive director of the company. On April 30, 2019, Huobi Labs, a subsidiary of Huobi Group, and Tianya Financial Services reached a strategic cooperation agreement to jointly launch the establishment of a "Global Cultural and Creative Blockchain Lab" in Hainan. By October, there were 4,400 registered companies in the Hainan Ecological Software Park, including more than 70 domestic blockchain giants and institutions such as Huobi Group, Baidu, Xunlei, etc., which have successively settled in the park; attracting more than 120 top universities from around the world Excellent scientists joined the Oxford Hainan Blockchain Research Institute, of which more than 50% have an international background. From the establishment of China's first village-level blockchain innovation alliance in Wenchang, Hainan, many blockchain conferences have been held since then, and the implementation of blockchain projects has continued until the Hainan Free Trade Zone (Hong Kong) Blockchain Pilot Zone in Hainan Eco The software park is officially established, and the presence of enterprises also means job opportunities and regional development. Blockchain is expected to become the second regional pillar industry in addition to traditional industries in the future in Hainan.

Advantages and disadvantages of the Chinese version of "Singapore"

In fact, since the third quarter of this year, Hainan has put some preliminary work on the agenda. On July 6, 2019, the launching ceremony of the New Age Civilization Practice Smart Volunteer Service in Longhua District, Haikou City was held in Haikou, and a combination of blockchain and public service platform was established in Longhua District. On July 15, the Hainan Provincial Government issued the "Hainan Provincial Action Plan for Optimizing the Business Environment (2019-2020) ", proposed 29 reform measures from 11 aspects, aimed at establishing a blockchain real estate registration model and realizing the linkage between real estate registration and other department data; September 7, 2019 The Hainan Free Trade Zone's first International Forum on Blockchain Token Empowerment Real Economy was held in Haikou. At the forum, the Haikou Blockchain Industry Association was formally established. However, based on objective factors, Hainan still faces some problems in its development. In view of this, the following will analyze the advantages and disadvantages of the Chinese version of Singapore from several aspects.

Advantage 1: Hainan's unique geographical environment

Since the second half of 2017, there have been nearly 100 various blockchain conferences held in Hainan. In addition to benefiting from the originally developed hotels and well-developed tourism and exhibition facilities, Hainan has the advantages of low cost compared to the same hot places such as Hong Kong and Singapore, including the cost of venue rental and personnel settlement. Secondly, the establishment of a free trade port has greatly increased the possibility of Hainan's future internationalization. In addition to the advantages of the free trade port in terms of level and bonus, the free trade port will also have a greater degree of freedom. Including sandbox supervision and economic and trade reform autonomy will bring Hainan's rapid progress in the blockchain field. For specific examples, please refer to the Zug Crypto Valley in Switzerland. The total net assets of the top 50 cryptocurrencies and blockchain-related companies in the Crypto Valley are about 44 billion U.S. dollars, including tax dividends and the freedom to regulate the most attractive external investors. Gu is also a test site for sandbox supervision. Once the policy is successfully implemented, it will be quickly implemented throughout the country. It will change from being passively promoted by the industry to actively proactive supervision. It will also set up a blockchain special group to provide applications for blockchain technology companies from top to bottom. Scenarios and appropriate organizational structure.

Advantage 2: Industrial applications such as tourism retail and agricultural traceability

As early as 2016, Hainan promoted green pollution-free agriculture, reduced the application of chemical fertilizers and chemical pesticides, strengthened the supervision of agricultural product quality, safety, production and marketing, and built a line of safety defense from "field farming" to "dining tables". Including Hainan's characteristic tropical fruits, vegetables and other healthy fruits and vegetables has made Hainan a golden sign on the export of food. With the support of the government, farmers organized professional cooperatives to unify varieties, standards, management, and brands. What is lacking in such a systematic green agriculture is an external trust-free mechanism. The large-scale entry of the blockchain will accelerate the progress of the industry like a raging fire, including source tracing, supply chain applications, etc., and is expected to solve the problem of difficult integration of platforms in other provinces in Hainan. Tourism retail is also a characteristic development area of ​​Hainan. These two fields have one thing in common, that is, close integration with traditional industries. The addition of blockchain not only improves great efficiency, but also implements the advantages of more low cost and high liquidity in Hainan. There are also aspects including cross-border payment and e-government, which can provide a good application scenario for the blockchain.

Disadvantage 1: Talents and supporting policy foundation needs to be strengthened

However, Hainan also has shortcomings such as scarcity of talents and backward policies. Compared with first-tier cities, Hainan has neither the accumulation of industrial talents for Internet IT nor the first-class related school majors. The location is not a traditional city that attracts high-end talents, and has a lower level of education infrastructure in Hainan than other first-tier provinces. In addition, blockchain support policies in areas such as Hangzhou and Shenzhen have already been introduced, and Hainan ’s subsidy-related policies that include technology, hardware, and talent are less prominent, and the industry ’s kinetic energy accumulation is thin, without the support of a strong economy. There is still a long way to go to become an industrial center in Hong Kong, Shenzhen or Singapore, but we believe that this Hainan International Offshore Innovation and Demonstration Demonstration Zone Construction and Blockchain · Digital Asset Trading Technology Innovation High-end Forum and will be in December The Shanghai South Plan of the chain released on the 4th has all strengthened the development of Hainan's blockchain. We also expect to see regulation driving innovation and achieving a dual-track future of technology and industry.

Figure 1: Statistics on the number of tourists in Hainan from 2012 to 2018 Source: Hainan Tourism Development Commission

Disadvantage Two: Hainan's Traditional Industry Development Slows Down

For many years, Hainan has taken tourism and agriculture as the main industry development direction, but we can see that since 2015, although the total number of tourists has increased year-on-year, the year-on-year growth rate has declined sharply, and it was only 9 before November 2019. In contrast, Chongqing and Qingdao, which are also tourist cities, have made significant progress, and domestic tourism has a tendency to sink. Third- and fourth-tier cities have a year-on-year growth rate of 30%. Therefore, Hainan must be developed in the industry. Take another path.