Beijing backs blockchain, but benefits come at a price

Subject

Blockchain in China.

Significance

China is moving rapidly ahead with the use of blockchain technology to support homegrown financial digitisation efforts. Blockchain technology records transactions in 'blocks' of data chained together so that they cannot subsequently be altered undetected. The objective of the technology is to combat fraud and increase trust in financial markets and also increase efficiency and reduce time lags.

Impacts

• Blockchain’s imperviousness to tampering may backfire in a system that has traditionally placed a high priority on 'information control'.
• More traceability of transactions will aid the Party's efforts to police itself by making corruption more difficult to hide.
• Blockchain technologies will help Chinese banks leapfrog from the paper-based approaches that they still widely use.
• Blockchain and digital currencies will receive strong support from state institutions and banks, as long as trading can be regulated.