The country with the largest population, which ranks third in territory and has one of the largest gold and currency reserves in the world, is intensively developing the cryptocurrency industry. A potential superpower, China, whose economy is second only to the United States, believes that cryptocurrencies are a valuable asset that can provide a safe haven for investment and attract foreign investment.
In China, not only a huge number of mining farms, miners, traders and one of the main cryptocurrency markets, but the policy itself is aimed at the intensive development of technology. After the blockchain was approved by the President of China, Xi Jinping, there was a massive growth in the stock market, the launch of hundreds of new projects began and the central bank of China took a course to accelerate the launch of its own digital currency.
National cryptocurrency is a weapon against the United States
According to analysts, China decided to hurry up with the launch of its own digital currency precisely because of a new turn of the confrontation in a trade war with America. Donald Trump announced the tightening of duties on Chinese imports, thereby prompting foreign investors to seek outs from the renminbi to more reliable assets – gold, other currencies and Bitcoin. By launching its own cryptocurrency with the Central Bank (DCEP), China intends to trade with other sanctions countries, thereby reducing financial losses from the trade war.
The government has been working to create a national digital asset since last year. Bloomberg reports that the exact date of DCEP's release to markets is still unknown, but the People’s Bank of China said it was close to launch. This should help strengthen international positions and the global use of the renminbi, as well as due to the state’s attempt to take control of the cryptocurrency market. From January 1, 2020, the adopted cryptography law of China will enter into force, which aims to regulate commercial cryptocurrency operations in accordance with established standards, minimizing possible financial and legal risks.
China's fear of Libra
For China, the Facebook Libra project provided yet another motive to accelerate the digitization of the national currency. Chinese authorities see Libra as a potential start to a new global financial system that could destroy the traditional order of government and central banks. At the China Finance 40 Forum, a senior Chinese central bank official, Mu Changchun, commented:
“If Libra is accepted by everyone and becomes a widely used payment instrument, then after some time it is quite possible that the project will turn into a global, super-sovereign currency. We need to plan ahead to protect our monetary sovereignty.”
He also noted that DCEP will be similar to Libra – it will be as safe as paper notes issued by the central bank, and can be used on platforms such as Tencent’s WeChat, and even without an Internet connection. It is worth noting that the Facebook Libra cryptocurrency will be supported by a basket of fiat money, which should ensure its stability and reliability, unlike other tokens. Facebook claims that stableblockin is designed to provide people with secure storage and payment without the need for bank cards around the world.
Although at present the US authorities are not sure about the safety of the Libra project and the issue of stablecoin in the summer of 2020 was in jeopardy, a tacit fight is taking place between China and Facebook. After the official announcement of the launch of the Libra project, China said that it will intensify its efforts to create its own cryptocurrency. The implementation of DCEP is China's ambitious response to the release of the cryptocurrency of the Facebook social network.
Over 500 new blockchain-projects
As President Xi Jinping strongly endorsed blockchain technology and urged his compatriots to take advantage of all the opportunities in the area of distributed ledger, a lot of new Chinese corporate blockchain projects opened up. The Chinese cyberspace administration, in which all blockchain projects are to be registered, has published 506 available at the moment. These include financial services industries such as asset management, trading, cross-border payments, and supply chains. Banks have also applied for 14 blockchain projects. Including private large companies.
The Chinese giant search engine, Baidu, has released the Xuper Chain blockchain network to provide basic service infrastructure, a decentralized application, Letsdog similar to CryptoKitties, the Baidu Blockchain Engine cloud service and the Token service for protecting digital content intellectual property rights. Alibaba Group, Tencent Investment Holding and Huawei Internet conglomerate, are constantly competing with Baidu. Alibaba is particularly active, leading a total of 100 blockchain projects. Tencent, who created the WeChat messaging app, is creating a package of blockchain services like Tencent Blockchain and Tencent Cloud TBaaS Blockchain. Its TrustSQL platform is a three-component system designed for digital asset management and authentication.
The Chinese government is also actively involved in many large projects on the lists, from communications highways to legal innovations and land use cases.
World mining giant
It is in China that the majority of video card and ASIC companies are located, and an impressively low cost for electricity is installed. Thus, local miners can purchase the necessary components of cryptocurrency mining at a much lower price than anywhere else in the world. Examples of mining giant farms are: Liaoning, Xinjiang, Inner Mongolia and Yunnan. The capital of bitcoin mining is the province of Sichuan - it is on its territory that about 70% of all bitcoins are mined.
Against the background of the speech of President of China Xi Jinping, as well as the adoption of the law on cryptography, one of the Sichuan officials called for support and active development of mining in the territory entrusted to him. The decision of the Chinese government to stimulate the extraction of cryptocurrency on an industrial scale led to the provision of discounts on electricity and the creation of the world's largest mining center in China.
So, we see that China is actively using blockchain to fight the United States, and President Xi Jinping considers this technology as an integral part of the country's plan to turn it into a superpower. The country of the rising sun has also passed a law to regulate the use of cryptocurrencies. The state funds research, launches digital national currency and supports mining.
It is worth noting that blockchain will play a key role in many sectors in the future, including digital finance, the Internet of things, artificial intelligence and 5G. All of China’s active efforts towards blockchain can make China’s large bureaucratic system even stronger. An active policy and huge enthusiasm in the field of cryptocurrencies gives reason to expect China to make a major technological breakthrough in blockchain innovation.
Editor: Alyona Deryabina