China’s DLT Efforts Will Be Politicised
China’s head start in the distributed ledger technology (DLT) space will see its efforts politicised at some point, the CEO and co-founder of a decentralized public network powered by DLT has said. Hedera Hashgraph’s Mance Harmona said in the inaugural Forkast Forecast that though it is not on the frontpages yet but it will be. He said:
“It’s not yet been the case, I think, that China’s efforts in DLT have been politicised but I think that they will be. I think that what China is doing with the BSN, the Blockchain Services Network and the CBDC efforts, that they are literally a step or two, or maybe three, ahead of most of the rest of the world in terms of their DLT focus and effort and that is being noticed. It’s going to be interesting to see how the politics of international relations affects companies that are working across borders with one another to participate in everything that is going on in this global ecosystem of DLT.”
Significance of China’s BSN
The BSN and the CBDC (or digital currency electronic payment project) have been flagship digital transformation programmes in China which promise a potential capability to incorporate and impact operational activities from within and outside of the country.
Aside from integrating major public blockchains with established global presence such as Ethereum, the BSN has been connecting with national programmes – as recently seen with its link to the Blockchain for Trade & Connectivity Network launched by Enterprise Singapore and the Singapore University of Social Sciences – which could see its global reach widened.
The BSN seeks to make connecting blockchains easier and cheaper for developers. Its interoperability encourages connectability at varying scales though it differs to this week’s reported launch of what the Xiong’an New Area in North China’s Hebei province describes as the first case in the world of blockchain technology being used for a city-level system to power the complete development of a digital city.
Digital yuan to impact already-changing financial environment
China’s digital yuan use, as reported after several pilots, has been setting the pace as the reference point for other major economies to study. At home, its roll out is expected to add to the dwindling long queues at ATMs or visiting bank buildings as most banking services have now moved to mobile phones and computers.
The shift has seen the number of ATMs drop by 68,600 over a year while 2,790 more commercial bank outlets were shut down in 2020 after more than 6,280 closed down over the past two years even as retail sales rise to over CNY8 trillion (about US$1.22 trillion) in the first three quarters of 2020 and up 9.7% year on year, according to the Chinese Ministry of Commerce.
The digital currency’s incorporation into China’s Belt and Road Initiative agenda that connects more than 70 countries will widen its reach across borders. Meanwhile, its consideration for other regional bloc use, coupled with its projected inspiration of a “tectonic shift in capital flows” in 2021 when introduced as another layer on top of China’s prevalent existing digital form of payment – 80% of which were via WeChat Pay and AliPay as at 2019 – could see an alignment with Harmona’s politicization suggestion.