Opinion: Sound Economy Behind China’s Blockchain Push?
The rationale behind China’s intent to spearhead the global blockchain agenda may still be shrouded in ambiguity but linking the Asian giant’s push to the soundness of its economy is a given. Revisiting the insight shared by the Head of Investment Specialists Asia Pacific Aberdeen Standard Investments, Donald Amstad, it is safe to say that the current state of China’s economy gives room to wriggle around in experimenting where others did not attempt.
After touching on China’s political environment and its solvency as what make it different from the West, especially the US which has an overburdening $124 trn unfunded liability that it can’t possibly pay back, Amstad said in a LiveWire interview in August:
“In China, there is no political cycle. Xi Jingpin is president and he will be for a very long period of time to come…The reason they (China) are solvent is because they have low level of debts. Secondly, they have a very low level of liability. Thirdly, they have an asset-packed balance sheet because in China you have state-owned enterprises. Most of these enterpises in China are massively profitable. The big four banks in China churn out massive profits. So, governments in Asia, governments in emerging markets have very sound economic and monetary policies in comparison to the West which is heading down the ‘Zimbabwe school of economics’ path, I’m afraid to say.”
Amstad also stressed on the rising global market volatility, its likely catastrophic effect for the West and how western central banks have been addressing it using unreliable short-term measures in his assessment of market economies. The fear that the global economy could go bust worries him but he maintains that even if emerging markets are hard hit, they will recover first and faster based on exisiting structre.
These factors may have emboldened China, which has had blockchain as one of its top five critical priority, to push even further. This is despite market research says the technology, which promises to disrupt industries and business models, could still use five to 10 years to be transformational across most industries. The timeframe will allow blockchain projects to position themselves to benefit from China’s projection to be a global leader in the blockchain technology space.
Some of the newly-launched developments that coincided with President Xi Jingpin’s “endorsement” of the distributed ledger technologies include internet giant, Tencent’s announcement that it’s leading the drafting of the first international standard for blockchain-based invoices after getting the approval of China’s taxation regulators and support from other countries. Elsewhere, just as the world’s largest cryto exchange by volume, Binance, is reportedly planning to open a China office, FTX rolled out its first spot market as a standard BTC/USD orderbook which sees the DRGN-PERP tracking the price of eight top Chinese digital currencies (BTM, IOST, NEO, NULS, ONT, QTUM, TRX, and VET) using a weighed average of their prices.