Читать книгу The Digital War - Winston Ma - Страница 32

Billed as “a strategy crucial for the millennium to come,” the Xiong'an New Area is a new area of “national significance” launched by China on April 1, 2017, following the Shenzhen Special Economic Zone in the 1980s and Shanghai Pudong New Area in the 1990s. Designed for taking over “non-capital functions” from the hyper-crowding of Beijing, Xiong'an (meaning “brave and peace”), located about 100 km southwest of Beijing, will be a new home—a “vice capital”—for Beijing's colleges, hospitals, financial institutions, and state-owned enterprises' headquarters.

As China's “city of the future”, Xiong'an has been designed to become a smart city zone for innovation. In this context, the integration and application of the Internet of Things (IoT) technologies, artificial intelligence, Big Data, and cloud computing has been strongly encouraged in the city planning. In particular, the new city is set to become the blockchain hub in China and has taken a lead in rolling out blockchain-based services.

The blockchain DNA of the megacity had started even before its construction. To build the vice capital over swampland, the government purchased land from local farmers. Those transactions are made via blockchain to keep them transparent and organized. The so-called Blockchain Land Compensation Distribution Platform distributes financial subsidies for relocated residents in the area. Since April 2020, DCEP, the blockchain-based digital currency, has been tested at hotels and convenience stores in the New Area.

In order to create a “beautiful forest to last a thousand years”, every tree in Xiong'an will have its unique identification after being planted. The Xiong'an project team has built a system powered by blockchain, Big Data, and cloud computing technology to track the whole process for quality control, including seedling selection, excavation, packaging unloading, planting, and irrigation. Based on this system, each tree has a digital ID. After being encoded, all of its information, including its species, place of origin, planting location, and growth status, can be found in the database.

In parallel, as a model of “transparent Xiong'an”, a blockchain-powered funding management platform is used to monitor the flow of cash and ensure the funds will be used exclusively for the digital forest project. The blockchain platform also tracks each worker's activities and directly pays salaries to their bank accounts. By the end of 2019, Xiongan had planted 14 million trees—on the blockchain.

China's DCEP has set off a global debate for its future potential to challenge the US dollar for primacy. To some, DCEP—the world's first central bank digital currency (CBDC) for a major country—may provide a functional alternative to the dollar settlement system that reigns supreme in the global economy for decades. For example, China could use DCEP to manage funding and transactions for its Belt and Road Initiative (BRI) of overseas infrastructure investments, extending its monetary sphere of influence.

This national digital currency push does not come as a surprise. In an October 2019 speech, Chinese President Xi Jinping declared blockchain “an important breakthrough,” that would play “an important role in the next round of technological innovation and industrial transformation.” President Xi urged that China should accelerate the development of blockchain to “seize the opportunity”, in remarks that marked the first major world leader to issue such a strong endorsement of the widely hyped—but still unproven—distributed ledger technology (DLT). (By contrast, most governments in the West have been far more cautious.)

Calling for blockchain to become a focus of national innovation, President Xi's speech detailed the ways the Chinese government would support blockchain research, development, and standardization. To global policymakers, China's blockchain push seems to serve two of its strategic goals: ending the hegemony of the dollar and reducing dependence on the United States for foundational technologies. The central government's support for blockchain projects in China puts any initiatives or standards that emerge on the front foot, potentially hastening the mainstream application and use of the technology.

To be clear, President Xi's speech and DCEP is entirely about blockchain, far from a vote of confidence in Bitcoin or other cryptocurrencies. Blockchain is a form of distributed ledger that creates an online database where every participant can share and synchronize information. The data, maintained in chained records called “blocks”, is not owned by any single authority (hence, the notion of “decentralization”). Such a decentralized, cryptography-based network mechanism enables immutable data retention and secure transmission. As a matter of fact, Chinese entrepreneurs have been on the crest of the blockchain wave since Bitcoin first gained traction.

The concept first emerged in the 1990s, but did not become reality until 2008, when Satoshi Nakamoto—a pseudonym whose true identity still remains unknown—reportedly launched Bitcoin, a digital currency that used blockchain to realize and store its value. China's startup ecosystem had aggregated enormous experience in building digital blocks before the release of the Ethereum platform in 2015, which marked a milestone in the second-generation blockchain system that embodied “smart contracts”. The blockchain field was revolutionized by the implementation of layered smart contracts in the Ethereum platform to create applications other than money exchanges.

Along the way, China has become home to some of the world's largest cryptocurrency “mining farms”—data centers hosting the high-powered computers where the so-called miners (companies or passionate individuals) compete against others in the blockchain network to solve complex math puzzles and earn new coins. According to CoinShare's estimate in December 2019, approximately two-thirds of global Bitcoin mining (65%) happens in China: Sichuan province alone produces more than half (54%) of global hashrate (the parameter for mining capacity). Moreover, China manufactures most of the world's mining equipment. Chinese companies, such as Bitmain, Canaan, and MicroBT, are among the world's biggest manufacturers of Bitcoin mining gear.

Furthermore, the Chinese exchanges for cryptocurrencies (Bitcoins and other tokens) used to lead the world in terms of volume. The “coin” rush was interrupted by Chinese authorities in September 2017, which effectively banned all Initial Coin Offering (ICO) activity within China as “unauthorized and illegal public fundraising” and “unauthorized public sales of securities”. The Chinese government also made illegal all cryptocurrency exchanges within the country. As a result, the market saw cryptocurrency trading and other related activities in China moving abroad due to tightened regulation.

Although China has cracked down on cryptocurrencies, shutting down all domestic crypto exchanges and banning all ICOs, blockchain technology itself is recognized as a revolutionary development by the government. After all the noise, hype, and speculation died down, the blockchain technology reached its third phase and has been integrated with the real economy since 2018 (see Figure 1.2). Real companies have come to the field to focus on application of the technology in solving real business problems to create solid values.

For enterprises, blockchain is expected to apply broadly in the business world to revolutionize how data is managed and shared. Blockchain can offer an excellent solution to synchronize data, especially sensitive information, across companies, industries and geographical boundaries. It can facilitate a trusted network that enables multiple parties to exchange data, information, and assets directly, as in the case of supply chain finance (see the details in Chapter 5 relating to fintech discussions) in the manufacturing sector. The technology is used widely across a range of industries in China: for banking, financial services, public services, healthcare, logistics, and smart manufacturing. If blockchain is mainstream anywhere, it's in China.

Figure 1.2 Blockchain from 1.0 to 3.0

No doubt, the launch of DCEP and the ongoing rollout of blockchain applications should further support China's global technology ascent. Whereas blockchain technology is newly embraced by China as a frontier of innovation, the country is also making giant strides in advancing the 5G network, artificial intelligence (AI), and more emerging technologies—a digital rush started from a chess game in 2017.