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China launches blockchain innovation center to boost digital economy

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(Kitco News) - China continues to be a driving force in the integration of blockchain technology into everyday society with the launch of its National Blockchain Technology Innovation Center in the capital city of Beijing.

First announced by the Chinese government in February, the research center was established to enable the country to experiment and develop breakthroughs related to blockchain technology while simultaneously maintaining the ban on cryptocurrencies.

According to local media reports, the center will collaborate with local universities, think tanks and blockchain businesses to advance the development of blockchain technology in China. This includes accelerating the construction of “ultra-large-scale” blockchain computing power clusters.

The Beijing Academy of Blockchain and Edge Computing, which is credited with developing the ChainMaker blockchain, has been tasked with running the new innovation center. ChainMaker is a home-grown blockchain backed by a consortium of Chinese businesses, most of which are state-owned, including China Construction Bank and China Unicom.

One of the main goals of the center is to help connect the siloed application chains that have been developed in China in recent years. Some have referred to this phenomenon as ‘blockchain islands’ and believe that it has restricted the pace of high-quality development of China’s digital economy.

“Building a national blockchain technology innovation center, carrying out key technology research on industrial applications and high-level national blockchain main chain construction, connecting blockchain application platforms, and aggregating blockchain application ecology will significantly improve blockchain innovation capabilities and core competitiveness,” said Zheng Zhiming, a professor at the School of Mathematics and Systems Science at Beijing University.

According to its operational plan, the center is looking to build a national blockchain computing power network composed of provincial and municipal backbone node networks and industry application node networks. This digital infrastructure will serve important industries and key areas of the national economy such as cross-border trade, supply chain finance, energy, production safety, and the food industry.

To help achieve its goals, the institution plans to train more than 500,000 specialists in blockchain and distributed ledger technology (DLT).

According to Dong Jin, director of the National Blockchain Technology Innovation Center, the center “will crack the underlying technology of the blockchain in multiple fields such as chips and bottom architecture, helping China achieve data security, credibility and consolidate the cornerstone of the national digital economy.”

The launch of the innovation center is part of China’s push to develop “blockchain with Chinese characteristics” as the nation looks to advance and integrate blockchain technology while excluding cryptocurrency, which is viewed as a threat to the country’s financial ecosystem. As of December, China has more than 1,400 blockchain-related companies, and at least 29 cities and provinces have included blockchain as part of their five-year plan for 2021-2025.

China and Singapore deepen crypto involvement as U.S. banks shun the industry

Chinese banks have also started to fund the development of blockchain technology in neighboring jurisdictions. Several of the country’s largest state-owned banks, including the Hong Kong divisions of Bank of Communications Co., Bank of China Ltd. and Shanghai Pudong Development Bank, have begun offering services to local crypto firms in Hong Kong or are exploring the possibility of doing so in the near future.

The country is also the global leader in the development of a central bank digital currency (CBDC), with its pilot for a digital yuan already established in 17 provinces, which includes 26 large cities and 5.6 million merchants.

On May 4, the French banking institution BNP Paribas partnered with the Bank of China to enable their corporate customers to seamlessly transact in the digital yuan, becoming the first foreign-owned bank to be included in the country’s digital yuan rollout. The French bank will also explore opportunities for expanding the use of China’s CBDC to smart contracts, utility payments, supply chain finance, and cross-border payments.

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