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The official newspaper of the Chinese Communist Party, The People’s Daily, printed a feature on Monday entitled ‘Three Questions to Blockchain’ which directly endorses blockchain technology. It explores real world applications of blockchain, looks at its relevance to China’s burgeoning digital economy, and emphasises the importance of regulation to healthy future development.

The article is of particular relevance since The People’s Daily provides a direct line to the thinking and opinions of the Chinese Communist Party. It is striking in that it appears to outline a specific policy of encouraging Chinese-based blockchain endeavors to compete with their Western counterparts.

“The mainstream blockchain technology platforms all originated from abroad. The domestic blockchain technology service providers should patiently start from the ground floor to make technologies independent and controllable, and strive to lead global blockchain technology development.”

The news follows a long line of China-related controversies, from the ban that sent shockwaves through the market last September, to the recent censorship of all foreign exchanges on Feb 5th of this year.

Doujia Li, a fintech researcher from the University of Peking, expresses an ambitious desire to press forward with the exploration of this technology, but also cautions that that the heat around ICOs as an innovative financing tool detracts from the technological innovation of the blockchain itself:

“The concept of blockchain is currently experiencing heat, not heat to solve real-world problems, but hot Money-raising, speculation valuation, especially the so-called ICO (first token distribution) financing tool innovation, nothing to do with technological innovation.”

Li distinguishes between the innovation of financial fundraising methods, like ICOs, and the innovation of blockchain itself. He then goes on to argue the case that regulation is essential to healthy development, and would help the public distinguish between projects with genuine promise, and opportunistic scams.

He suggests that regulators should take the opportunity to intervene when the market is still in its infancy, as this would create the steady growth needed for projects to develop working prototypes and form key partnerships, along with preventing the occurrence of ‘hot air’ projects that are harmful to the entire industry.

The next section of the report gives an overview of blockchain technology, and details several key real world applications in China, including the counterfeit goods industry, financial services, and public welfare.

Several key projects working in these areas have emerged from the mainland, including VeChain, which has numerous prestigious partnerships, Matrix AI Network, which is working with the government on possibly their biggest ever infrastructure project, and NEO, the ‘Chinese Ethereum’ (that is actually global) which flourished in 2017 despite the government crackdown.

Blockchain is seen to be one of the key innovations that could help China to lead in the digital economy, which at the time of writing is the second largest in the world and accounts for over 30% of China’s GDP.

The report concludes by referring back to China’s Blockchain Technology and Application Development White Paper 2016, and making the call for China to lead future global development.

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