China has announced its plans to establish a national blockchain infrastructure. However, this initiative does not suggest any relaxation of the restrictions on private cryptocurrency trading, which is still prohibited in mainland China.
This initiative was outlined in a policy document titled “Opinions of the CPC Central Committee and the State Council on Developing New Productive Forces,” which was released by the official Chinese state news outlet Xinhua on Friday.
Notably, the document did not reference Bitcoin or any other independent cryptocurrencies. Since 2021, the Chinese government has imposed a comprehensive ban on all cryptocurrency transactions, including those involving international companies offering services to individuals in mainland China.
On the other hand, China is actively using its own digital currency called the digital yuan. Recently, the government has been promoting its adoption among citizens, increasing the number of banks authorized to provide digital yuan services from 22 to 30 as of August.
Furthermore, China has previously invested in blockchain technology, which underpins cryptocurrencies. The nation currently operates a Blockchain-based Service Network (BSN), a state-supported platform that facilitates enterprise and governmental applications but forbids cryptocurrencies like Bitcoin from using its services.
It’s still uncertain whether the new system will expand upon the existing BSN.
The policy document also emphasized the need for a more thorough integration of China’s digital and physical economies through the digitization of the manufacturing sector, creating a “national integrated computing power network,” and initiating the “Eastern Data, Western Computing” project. This massive infrastructure initiative aims to store data generated in China’s economically vibrant and populous eastern regions in the more resource-rich but less populated western areas.
Nonetheless, officials overseeing this digital transformation have been cautioned against prioritizing the virtual economy over the real economy, engaging in excessive and comprehensive development, or creating economic bubbles.
The implementation and regulation of this digital expansion fall under the jurisdiction of the Central Financial and Economic Affairs Commission and the National Development and Reform Commission. These bodies will likely play a crucial role in determining how the new blockchain network will be integrated into China’s broader digital ecosystem.