ITA Report: Bitcoin a ‘Top Focus’ in Chinese FinTech

According to the 2016 Top Markets Report of Financial Technology produced by the U.S. International Trade Administration (ITA), Bitcoin is one of the top focuses of China’s FinTech market. The ITA is a bureau within the U.S. Department of Commerce, and this report is a market assessment tool for U.S. exporters.

Also read: China’s Constant Bubbles Drive Investors to Bitcoin in Droves

Why the ITA Pays Attention to China

The second largest economy in the world is well highlighted in the ITA’s report. The country is ranked as the number one projected export market for 2017 in the payments category, which is a subsector of FinTech subsector. For the overall FinTech sector, China ranks second only to Japan while the UK is third. Since this is a list of export markets, the U.S. is not included in the rankings.

China’s FinTech Scene

According to PricewaterhouseCoopers (PwC), China is “by far the biggest FinTech ecosystem in deal size and number of deals done.” Independently, a 100-page Citigroup’s report claims that Chinese FinTech firms may have even more clients than the largest banks. However, regarding the regulatory regime for the FinTech sector, the ITA report states that it is still in development, similar to most other countries. Also, it specifically finds that:

Overall, the Chinese FinTech market is currently focused on payments, lending and bitcoin.

Chinese Payments & Lending

In China, approximately 1 in 10 of all Chinese payments is done through Alibaba’s Alipay, the ITA report says. An independent report by McKinsey states that “third party payment transaction volume, at over >10 trillion RMB, easily overshadows US and EU leaders such as Paypal.” In fact, McKinsey adds that at the end of 2015, 89.2% of China’s 12 trillion renminbi ($1.8 trillion) Internet finance sector consisted of third-party payments.

For lending, McKinsey states that “the P2P lending transaction volume, at more than 500 million RMB, is the largest globally.”

Chinese Bitcoin Scene

As for Bitcoin, 80% of total Bitcoin volume is exchanged through the Yuan currency, the ITA report notes. In fact, the amount has recently fluctuated to above 90%. The majority of Bitcoin mining power is also located in the country, and Bitcoin events are constantly being held there with speakers from all over the world.

In March, CEO of BTCC, Bobby Lee told TechinAsia that “people in China are buying and selling Bitcoin in boatloads.” He said:

The great part is that in China, Bitcoin is very popular. There’s a lot of speculation, and a lot of mining activity, and a lot of traders.[…] There’s huge interest, demand, and activity in China.

In June, a consortium of technology and financial firms in China, including Chinese search giant, Baidu, made a $60 million investment in the Chinese unit of Circle. Circle Founder and CEO, Jeremy Allaire, said to USAToday that:

If you look at the trends, China very well could be the driver of the adoption of block chain consumer services.

Allaire also noted at the time that China is well ahead of the U.S. in adopting digital payment systems.

Do you think the ITA is right that China’s FinTech market is focused on Bitcoin? Let us know in the comment section below.

Images courtesy of Cnbc, Bitcoinity, kme.digital