Research by China Academy of Information and Communications Technology: Local Chinese Governments Driving Rapid Growth of Cryptographic Technology.
China Information and Communications Research Institute (CIIC) released the 2023 Blockchain White Paper yesterday. The white paper discusses the current development of China’s Web3 ecosystem, with local governments and leading enterprises at the forefront, exploring how decentralized technology can improve domestic institutional efficiency.
Table of Contents:
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Global Blockchain Industry Status
Blockchain Startup Market
Blockchain Capital Market
Current Status of China’s Blockchain Industry
Distribution of China’s Blockchain Industry
China’s Blockchain Capital Market
China’s Blockchain Industry Application Starts Overseas
Local Governments Taking the Lead in Promoting Industry Development
Local Governments Promoting Infrastructure
Local Governments Promoting Industry Policies
China Has Not Abandoned the Cryptocurrency Industry
Affected by various factors such as macroeconomic conditions, the growth of global blockchain enterprises has significantly slowed down, with China and the United States maintaining a leading position in the number of cryptocurrency enterprises.
As of December 2023, there were a total of 10,291 blockchain enterprises worldwide, mainly concentrated in the United States and China, with 2,802 and 2,697 enterprises respectively, accounting for 27% and 26% of the total.
The financing of global blockchain enterprises has slowed down, with the United States taking the lead.
In 2023, due to tightened regulatory policies in many countries, the total financing of global blockchain enterprises in the first three quarters was only 979 deals, with a total amount of 6.054 billion US dollars, a decrease of 32% and 77% respectively compared to the same period in 2022.
However, in the third quarter of 2023, the amount of financing for blockchain enterprises in the United States accounted for 50.0% of the global total, far higher than other countries (10.3% for the UK, 4.8% for Singapore, and 4.7% for China).
As of October 2023, there were 131 unicorn blockchain enterprises worldwide. The top five enterprises in terms of valuation were:
Binance: $45 billion
Upbit: $17 billion
Ripple: $15 billion
Blockchain.com: $14 billion
OpenSea: $13 billion
The United States has the most unicorn blockchain enterprises, with a total of 71, significantly ahead of other countries.
China’s blockchain enterprises are mainly concentrated in regions with high digital development, including Beijing, Guangdong, Shanghai, Zhejiang, Jiangsu, and other provinces and cities.
As of the first three quarters of 2023, Chinese blockchain enterprises completed a total of 14 financings, with a total disclosed amount of $54 million. Some of the funded blockchain enterprises include Border Intelligence, LanguageWave, Lingxiao Collection, and Dinglian Numerical Science.
According to Forbes’ 2023 Global Blockchain Top 50 List, China has six companies on the list, including Ant Group, Baidu, Construction Bank, Industrial and Commercial Bank of China, Tencent, and WeBank.
Domestic large companies have established new entities overseas and organized product and partner launch events to develop the Web3-related field:
China Mobile Hong Kong, COSCO Shipping, Huawei, and other companies jointly established the Hong Kong Web3 Association.
Alibaba Cloud, Avalanche, and MUA DAO launched the Cloudverse solution.
Huawei Cloud officially launched the Web3 node service NES.
Ant Group launched the Ant Chain Web3 new brand Zan.
Tencent Cloud launched the blockchain RPC service for developers and enterprises.
With the policy “Guiding Opinions on Accelerating the Application of Blockchain Technology and Industrial Development” issued in 2021, many provincial governments have accelerated the exploration and trial of city blockchain infrastructure to meet the needs of data sharing, resource management, and other public services, unifying the support for related applications.
As of now, more than ten cities nationwide have completed and put into use blockchain infrastructure construction, including the following representative cases:
“Sichuan Chain” led by Sichuan Province: China’s first provincial-level blockchain, aiming to combine blockchain with medical, agricultural products, and exploration asset management for information sharing applications.
“Henan Chain” led by Henan Province: The application scope includes electronic licenses, financial services, judicial evidence preservation, real estate transaction registration, agricultural product traceability, smart healthcare, and other application scenarios.
“Mountain City Chain” led by Chongqing City: Provides blockchain services to various departments of Chongqing City, manages Chongqing’s public housing fund information sharing, significantly improving service efficiency, and providing a solid information foundation for housing provident fund.
“Zhejiang Chain” led by Hangzhou, Zhejiang Province: By combining blockchain with privacy computing technology, it constructs a network on the city’s big data platform to provide secure channels for the circulation of various data.
“Sovereign Chain” led by Guiyang, Guizhou Province: Supports the deployment of blockchain-related business applications by government departments at all levels, promotes the deployment of leading enterprises, major projects, and key projects, and pilots applications in urban governance, technology finance, livelihood services, and industrial networks.
“Taihu Chain” led by Wuxi, Jiangsu Province: Integrates the technical operation of the city’s blockchain products and related applications into unified management.
Most of the nodes of the above-mentioned blockchains are around 20 to 60, mainly designed in the form of consortium chains.
In addition to blockchain infrastructure, many provincial governments in China have launched various related projects to promote industry development, including:
Shanghai: Launching the “Shanghai Metaverse Key Technology Action Plan (2023-2025)” to promote the development of underlying technologies, including Web3 network operating systems, digital identity management, decentralized storage, trusted computing chips, and other technologies.
Chongqing: Launching the “Meiyuelake Measures (Trial) to Support the Construction of a New Generation of Internet-led Global Digital Technology Innovation Highlands” to explore the construction of a Web3-oriented digital asset market, organizing innovative competitions, and supporting the establishment of an open-source community for industry ecosystem development.
Beijing: Launching the “Beijing Digital Consumer Energy Level Enhancement Work Plan” to improve the digital content intellectual property protection mechanism, promote the integration of rights of music, images, and written works in the virtual and real worlds.
Hainan: Launching the “Hainan Province Measures to Accelerate the Development of the Blockchain Industry” to support leading companies in exploring the construction of digital asset trading platforms and promote the pilot application of digital asset-related formats in Hainan.
Although the outside world’s impression of China in the past seemed to be a complete ban on the circulation of cryptocurrencies within its borders, in fact, the government is still promoting the development of encryption technology, especially underlying networks, decentralized identities, information sharing, and other technologies.
China only prohibits the speculation of cryptocurrencies, not the technology itself.
Apart from the speculative nature of cryptocurrencies and NFTs, China has indeed found a suitable strategy for the development of the cryptocurrency industry that aligns with its policies – using decentralized technology to improve domestic industrial efficiency and accelerating the practical adoption of decentralized technology with the cooperation of leading enterprises and the leadership of local governments. There is indeed an opportunity to see a new round of interesting social experiments and applications in China.
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