Xi Jinping Moves to Embrace Blockchain Technology in China

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Xi Jinping Moves to Embrace Blockchain Technology in China
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Last Thursday, Chinese President Xi Jinping delivered a speech to senior members of the Communist Party calling for increased development of blockchain and technological innovation in China, according to Xinhua, the Chinese news agency. He underscored China’s solid blockchain foundation, and called for more efforts “to strengthen basic research and boost innovation capacity to help China gain an edge in theories, innovation, and industries of the emerging field.”

Last Thursday, Chinese President Xi Jinping delivered a speech to senior members of the Communist Party calling for increased development of blockchain and technological innovation in China, according to Xinhua, the Chinese news agency. He underscored China’s solid blockchain foundation, and called for more efforts “to strengthen basic research and boost innovation capacity to help China gain an edge in theories, innovation, and industries of the emerging field.”

He highlighted the fact that many of the world’s major countries are expanding their development of blockchain and reportedly called for more research into blockchain “to increase China’s influence and rule-making power in the global arena,” according to Chinese state media.

Two days later, a national law was passed regarding the utilization and management of cryptography in the country to go into effect Jan 1, 2020. Following the reports of President Xi’s comments, the price of Bitcoin rose substantially, briefly reaching a price of $10,000 after trading around $7,500 the day before.

Image:  Alexander Ramsey via Unsplash

What Does This Mean?

Cryptocurrency exchanges have been banned in China since 2017, but China’s central bank has reportedly been aggressively working on its own cryptocurrency with much more zeal after Facebook formerly announced its Libra Association in June of this year. These actions by China’s central bank and the comments made by President Xi showcase China’s desire to acquire a major foothold in the global blockchain domain to compete with other players on the world stage, particularly Libra in the United States.

Mark Zuckerberg’s recent grilling by Congress on Libra points to a future where government intervention and regulations of blockchain are inevitable. Many lawmakers have made their skepticism clear, and others have asked Facebook to postpone Libra all together. Several prominent backers of the project have also pulled their support in recent weeks, showcasing Libra’s challenges in garnering trust and momentum moving forward. However, Facebook has warned that if the Libra project fails, China’s digital currency will come out ahead and become a major threat to U.S. influence.

A digital arms race between major powers is already underway, and while U.S. lawmakers are arguing about if and how to regulate blockchain, President Xi has indicated he is ready to throw the full weight of the Chinese state towards his global digital currency. This may spell serious trouble for the decentralization of blockchain as the Chinese currency will be highly centralized in the Chinese Central Bank, and global financial transactions on its blockchain will inevitably be used to expand the already pervasive surveillance apparatus used to maintain state power in Beijing. 

Anthony Pellegrino

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