Once again, but this time in a big way. Xi Jinping, the head of state of China, perhaps the most powerful person in the world, has praised blockchain technology in a speech to his party. The fact that a President of China is so committed to a concrete technology is rare and gives the blockchain in China a similar status to the Internet and artificial intelligence.
Xi’s speech is accompanied or followed by a lot of related news from China: the central bank says a digital yuan is nearing completion; the government plans to perpetuate the loyalty of party comrades in the blockchain; a crypto law is passed to unify the use of cryptography; the Sichuan government decides to use excess hydroelectric energy even more consistently for blockchain things; and a large bank invests in a Bitcoin wallet.
This wealth of news demonstrates how big the blockchain issue has become in China. We try to summarize the news in one article. The beginning of course is the speech of the head of state.
The speech of Xi Jinping
Xi Jinping, chairman of the Chinese Communist Party and president of the country, is everything, but certainly not a cryptoanarchist. The 66-year-old has the reputation of having brought the dictatorship back to China after the climate had eased under his predecessor Hu Jintao. The fact that this powerful man now praises the blockchain in a speech in the highest tones should not be overestimated in its importance. Dovey Wan, a crypto voice from China active on Twitter, to which we will refer several times in this article, says it like this: “Whenever Xi stands behind something, and if he shows only a very weak preference, the local governments will follow with massive grants and subsidies. So the speech is a “VERY positive signal for all ‘blockchain, but not crypto’ companies”.
So what did Xi say and how can it be understood? Mable Jiang from the Nirvana Investment Fund took the trouble to translate the speech into English and comment on it. Those who want to read it as a whole should follow the link to Medium. Here I will only discuss some parts.
First of all, Xi requires that you perceive the blockchain as “an important breakthrough of an independent innovation of a key technology” and “recognize the right approach to use our resources, increase our investment and accelerate the development of the blockchain technology”. Blockchain applications have already extended to “digital finance, the Internet of Things, intelligent manufacturing facilities, supply chain management, digital asset trading, and more”. China is in a good position to do this, but it must attract development and “actively promote blockchain solutions”.
Therefore, Xi Jinping formulates numerous tasks for the party: For example, research should be intensified. Standards will have to be set, an ecosystem of blockchains will have to be built up, and the integration of blockchain with other future technologies such as artificial intelligence, big data and the Internet of Things will have to be promoted. Education and training must also be expanded in order to have a talent pool of future innovators.
The president sees so many use cases for Blockchain that he almost sounds like a management consultant: Blockchains are supposed to improve data sharing, optimize business processes, reduce operating costs, improve synergies and build a credit system. The deep integration of Blockchain with the real economy will solve problems in financing small and medium-sized businesses, controlling banks and monitoring government departments. The blockchain is also designed to accelerate industry development by improving the supply/demand convergence across supply chains. Basically, Xi Jinping’s ideas do not differ so much from the blockchain strategy formulated by the German government.
Furthermore, blockchains are supposed to arrive in people’s daily lives. They should become part of education, employment, pensions, poverty reduction, medicine, counterfeiting, food security, public welfare and more. It is necessary to research the connection between blockchain and smart cities, as well as their use in information infrastructure, transport, energy and urban administration. Blockchain will become part of the digital government and help improve data exchange between cities, regions and departments.
So the president wants to demand an almost unmanageable number of Blockchain applications. Free crypto currencies are apparently not one of them. One should have no illusions about what China wants from the blockchain: it is not about freedom and independence, but about control. The blockchain should help to better control many areas of the economy, government and everyday life. If you want to know more about what the Communist Party is doing with digital technologies, you should read Kai Strittmatter’s gripping and frightening book “The Reinvention of the Dictatorship”, especially the chapters on digital censorship and artificial intelligence. Technology is of particular interest to the Chinese government in order to make rule over 1.4 billion people more efficient. The fact that China and Germany have relatively similar ideas about which areas the blockchain should be used for is likely to be frightening rather than encouraging.