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China’s Local Government Grants RMB1.5M to a Blockchain Company

According to 8btc, the government of Nanjing City, the capital Jiangsu Province, has granted RMB 1.5 million yuan to a company named Bankledger which is aimed at providing blockchain solutions to banks. It’s the first time for China’s company to gain grants directly from the government. The move is among a serious supportive voices from the central government of China. Though it’s not a huge amount of grants, it shows that the supportive attitude from the central government has trickled down to the local and it has been translated into real action.

The CEO of Bankledger, Dr. Shentu Qingchun, when receiving 8btc’s exclusive interview, has noted that the grants are pure help from the government and the company’s ownership structure and management or operation will not be affected at all.

bankledgers

The grants are parts of efforts of Nanjing’s local government to encourage local innovative startups. Dr. Shentu said it started to apply for the incentives in March and began to lecture blockchain technology to the judges responsible for the grants program. He’s so glad that local government finally recognized the value of blockchain.

There are other motives behind the grants this time. According to Report on China’s Banking Industry published by KPMG in September, the growth rate of net profits has been down to 2.4% in 2015 from 9.7% in 2014. The figure is 14.5% in 2013. The downturn pressure has compelled the banking industry to update or even reform their business mode. KPMG’s report has noted that data analysis will be the core to boost the reform of banking industry, but the biggest problem now is information obtained by all the banks in China can never be shared thus huge waste of the current information sources. The reason is that banks  have their own data storage system which is not interoperable The consequence is evident in the case of some village or township banks. These banks do not possess the huge markets like China big 5 banks* and are most eager to expand their businesses. But they found it so hard as their information resource will never go across cities or provinces. Lacing basic information like credit, transaction records, they do not dare to conduct businesses like issuing loans. The only way is to require valuable assets as collaterals. But small and medium enterprise are those who need them most and they rarely have valuable assets. Thus a vicious circle.

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         Dark blue: net profits Blue: growth rate Unit:trillion  RMB        

source: Report of Banking Industry 2016, KPMG

When blockchain technology can just connect these information silos, the government naturally endorses the efforts of Bankledger, who has already had cooperation with Webank, a private online bank based on Wechat( the most popular instant message app in China with 700m active users). China Merchants Bank, a A-share listed bank and the most innovative one in China, also joined Bankledger to translate blockchain technology into real benefits, though it has not revealed details of cooperation.

The efforts of Bankledger of enlightening the government are the correct way to approach government when it comes to brand-new techonology. The quick, active and concrete responses from the Chinese government to blockchain technology are encouraging. The mutual endeavor will hasten the pace of the coming of blockchian era.

* China’s big 5 banks refer to Industrial and Commercial Bank of China(ICBC),Bank of China(BOC), China Construction Bank(CCB) Agricultural Bank of China(ABC),and Bank of Cmmunications. All of them are A share or/and H-share listed company.

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