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Why China Won’t Miss Opportunity With Blockchain

In this interview with Dr. Hui (Hugo) Gong, the founder of the China-UK Blockchain Association talks about the opportunity presented to China to take the lead in the blockchain field globally and how the Asian giant grabbed it with both hands.  His Association was established to serve as a bridge between China and UK in the realm of Fintech and Blockchain. 

Q1: China has the market, the technology and now the government’s backing for distributed ledger technologies like blockchain to excel. Yet, there are issues of risk prevention due to claims of frauds and cybercrimes. Where do you see the solution lies in ensuring that the blockchain space gets better for projects to maximize the opportunities out there?

Hui: China has moved to blockchain and achieved remarkable results in recent years. However, when it comes to risk, the risk is always there at the expense of science and technology advancement. Just like traditional finance remains risky even without the flourishment fintech. What we need to do is to accept the risk and to develop reasonable strategies to avoid it.

Similarly, we cannot ban motor vehicles simply because of the accidents caused by fast driving. Instead, we should pay more attention to road design and the formulation of laws and regulations as a proper response. Those who were the first to drive a car would taste blood, and also pay for it. The situation is the same in the information era. While China adopts a more open and tolerant attitude towards the innovation brought by blockchain, with numerous high-tech industry parks having been established in Zhejiang and Guangzhou province, the cyber fraud rages at the same time.

The primary reason why fraud is getting worse is not blockchain, but the lack of awareness about emerging technology. Given that China has paid a great effort to struggle with P2P scams, there are certain expectations that the same effort would be made in protecting the blockchain industry. As is known, the authorities, including cyberspace administration of China and local financial bureaus, have invited industry experts to work on project screening and made a list of ringleaders who are subject to border control. The government would have a zero-tolerance for any action that encourages and promotes cyber fraud on the pretext of blockchain.

Q2: Do you think the recent speech by the Chinese president, Xi Jingpin, regarding seizing the opportunity blockchain has to offer, is a gamechanger for the industry and why do you share this view?

Hui: China’s President Xi called for higher levels of research and investment into blockchain during a meeting with Communist Party officials, saying blockchain would serve an essential role in the next round of technology innovation and industrial transaction. I think there are two key points and one expectation indicated in his speech.

The first point is that China should be engaged in setting industry standards during the research and development of blockchain. It is known that the United States established the rules for the Internet. Blockchain, being the core technology of the fourth industrial revolution, its standards will determine who leads value interconnection. China will not miss such an opportunity, and this is perhaps also the reason why president Xi gave a critical speech on the day of the programmer.

The other key point is inclusive finance. The failure of P2P in China can be attributable to the misuse of technology. While inclusive finance needs to be driven by emerging technology, blockchain seems to be the best solution to the promotion of personal credit system and inclusive finance. As to the expectation, the advancement of technology not only contributes to China but also to all humanity. Blockchain will be an opportunity for China to connect with the world, including internationalization of RMB or the exchange of culture and technology.

Hui is a co-author of Blockchain and Coken Economics: A New Economic Era. He currently lectures in Finance and Fintech at the Westminster Business School, teaching courses in finance, financial derivatives, blockchain and financial big data. His research interests cover most territory of the Fintech industry, including Algorithmic Trading and High-frequency Trading, Blockchain, Cryptocurrencies, and Artificial Intelligence.

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