China gets into blockchain race with US

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Updated 03 November 2019

China gets into blockchain race with US

  • China is the latest in a handful of countries to have adopted a law strictly governing the encryption of data — particularly blockchain technology
  • Reputedly unfalsifiable, blockchain is a database shared across a network of computers

BEIJING: China has launched an ambitious effort to challenge the US dominance in blockchain technology, which it could use for everything from issuing digital money, to streamlining a raft of government services and tracking Communist Party loyalty.
The technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees blockchain as an integral part of the country’s plan to become a high-tech superpower.
Beijing is the latest in a handful of countries to have adopted a law strictly governing the encryption of data — particularly blockchain technology, which allows the storage and direct exchange of data without going through an intermediary.
Reputedly unfalsifiable, blockchain is a database shared across a network of computers. Once a record has been added to the chain it is almost impossible to change.
It is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin — which Beijing may seek to replicate as it pushes ahead with its plans for a world-leading government-run digital currency.
Although the new law for blockchain “is still rather vague,” the country is clearly one of the most active in terms of regulation, Stanislas Pogorzelski, editor of specialist site Cryptonaute.fr, told AFP.
“China has understood very well that to stay a superpower, you have to be at the forefront of new technologies,” said Pogorzelski.
Blockchain is set to play a key role in many sectors in the future, including digital finance, Internet of things, artificial intelligence and 5G.
It could also serve to make China’s vast bureaucratic system more efficient.
The official Xinhua news agency said a blockchain-based system had been used for the first time to automatically generate and file an enforcement case in Chinese court against a party who failed to pay damages in a mediation agreement.
With less human intervention, such systems could make judicial enforcement in China “more intelligent and transparent,” the agency said.
Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology.
“Blockchain should play a bigger role in strengthening Chinese power in cyberspace, developing the digital economy and promoting socio-economic development,” Xi said.
“The general sentiment of Xi’s comments was simple,” said Anthony Pompliano, who writes a daily cryptocurrency newsletter.
“Blockchain technology is really important for the future and China plans to be the global leader,” Pompliano added.
According to analyst Kai von Carnap of the Mercator Institute for Chinese Studies, blockchain-backed tools have potential applications that go well beyond improving administrative efficiency in China.
“More interesting will be those targeting party discipline, internal stability and ideological loyalty,” Von Carnap told AFP.
One example is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them.
Blockchain technology is then used to store their responses on a permanent, widely distributed ledger — recording their thoughts in cyberspace forever.
As China trumpets its push for more blockchain technology, it is hoping to outpace trade-war rival the United States, whose President Donald Trump tweeted his disdain for cryptocurrencies in July.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he wrote.
The contrast between the world’s two biggest economies is “striking,” according to Pompliano, who says “bitcoin, blockchain technology, and digital assets are not a priority for America.”
Facebook chief executive Mark Zuckerberg had to defend his plans to launch a digital coin called Libra to the US Congress in October, after it faced a torrent of criticism from all sides — including governments who see it as a threat to their monetary sovereignty.
“I don’t think Libra will succeed,” Huang Qifan, vice director of the CCIEE, an economic think-tank that advises Beijing, said this week in remarks widely reported by state media.
“It is better... to have sovereign digital currencies issued by a government or a central bank,” he said.
Last year China released a damning report on existing digital currencies, saying they were “increasingly used as a tool in criminal activities.”
But while Beijing banned cryptocurrencies two years ago, it is fast-tracking preparations for its own state-run virtual currency, which is supposed to facilitate transactions and reduce costs.
The anonymity of cryptocurrencies allows users to buy and sell freely without leaving a digital trail — but China’s mooted e-cash system will be tightly regulated, experts say, and run by the People’s Bank of China.


Alibaba confirms huge Hong Kong public listing worth at least $13bn

Updated 30 min 29 sec ago

Alibaba confirms huge Hong Kong public listing worth at least $13bn

  • Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade
  • Alibaba Chief Executive Officer said the group wanted to participate in Hong Kong’s future

HONG KONG: Chinese technology giant Alibaba on Friday confirmed plans to list in Hong Kong in what it called a $13 billion vote of confidence in the turbulent city’s markets and a step forward in its plans to go global.
The enormous IPO, which Hong Kong had lobbied for, will come as a boost for authorities wrestling with pro-democracy protests that have tarnished the financial hub’s image for order and security and hammered its stock market.
Alibaba will offer 500 million shares at a maximum of HK$188 apiece to retail investors, the company said. The number eight is considered auspicious in China.
Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade after insurance giant AIA raised $20.5 billion in 2010.
Alibaba had planned to list in the summer but called it off owing to the city’s long-running pro-democracy protests and the China-US trade war. The US and China are now working on sealing a partial trade deal.
Daniel Zhang, Alibaba Chief Executive Officer, said the group wanted to “contribute, in our small way, and participate in the future of Hong Kong.”
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” he said.
The firm’s shares are already traded in New York. A second listing in Hong Kong is expected to curry favor with Beijing, which has sought to encourage its current and future big tech firms to list nearer to home after the loss of companies such as Baidu to Wall Street.
In the statement, Zhang said that when Alibaba went public in 2014 it “missed out on Hong Kong with regret.”
Mainland authorities have also stepped up moves to attract such listings, including launching a new technology board in Shanghai in July.
The listing comes after the city’s exchange tweaked the rules to allow double listings, while Chief Executive Carrie Lam had also been pushing Alibaba’s billionaire founder Jack Ma to sell shares in the city.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said.
It has long been expected to launch a multibillion-dollar stock listing in Hong Kong but appeared to postpone the offering because of political and economic turmoil.
Hong Kong’s key Hang Seng Index rose 0.48 percent in morning trading following the announcement
Chinese shoppers set new records for spending on Monday’s annual 24-hour “Singles’ Day” buying spree, despite an economic slowdown in the country and the worries over the US trade war.
It said consumers spent $38.3 billion on its platforms over that stretch, up 26 percent from the previous all-time high mark set last year.
Alibaba also said it saw record amounts of cross-border sales, underlining its plans to expand globally.
“Globalization is the future of Alibaba Group. We firmly believe the marriage of digital technology and commerce will bring about unprecedented change that will not be limited by borders,” Zhang said.