China’s foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), will pilot its cross-border trade finance platform supported by blockchain, according to local financial news media outlet CNStock on April 24.

The platform was initiated by the forex bureau and developed in collaboration with Hangzhou Blockchain Technology Research Institute (ZCBTRI) which is a subsidiary of the country’s money printer – China Banknote Printing and Minting Corporation.

Backed by the state, it is claimed the second blockchain project with far-reaching influence in the domestic financial sector, after the launch of a similar platform for cross-border trading across Guangdong-Hong Kong-Macau Greater Bay Area, which is shepherded by the country’s central bank PBoC.

According to the report, China’s traditional import and export trade financing system has long been beset by low operational efficiency and asymmetrical data sharing for its over reliance on labor and paper, which ultimately increases the financing cost of enterprises for its high verification cost, incomplete financing information, repeated financing and supervision issues in the process.

To address these issues, the platform will manage the entire trade financing process – verifying the authenticity of customs documents and automatically calculating corresponding financing balances, thus to prevent double or excessive financing. The pioneering use of tripartite privacy protection cryptography scheme on the platform will ensure business information, which are recorded onchain for real-time and transparent data sharing, visible only to counterparties and regulators.

The pilot of the platform will run for six months in three foreign trade-concentrated provinces – Jiangsu, Zhejiang and Fujian – and two cities, Shanghai and Chongqing. A plurality of major banks in the country have also participated in it, including Bank of China, China Merchants Bank, Industrial and Commercial Bank of China, etc. After the success of the pilot, the platform is expected to be promoted nationwide, and more business scenarios may be supported in the future.