Explainer | What Xi Jinping’s blockchain advocacy means for China – and the world

Blockchain was included in the State Council’s technology blueprint three years ago and some local governments have applied it to administrative work

Xi Jinping’s backing of blockchain created a lot of excitement in the cryptocurrency world, including renewed talk of China launching its own digital currency

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Blockchain is a distributed database where every participant shares and synchronises information. Photo: Shutterstock

Coco Fengin GuangdongandJane Zhangin Hong Kong

Published: 7:30am, 14 Nov 2019Updated: 1:44pm, 15 Nov 2019

Blockchain programmer Ean Zhao was in a routine meeting when the news broke: Chinese President Xi Jinping endorsed blockchain development in China. Zhao was confused for a few seconds but then relieved. “I will no longer feel on tenterhooks when coding,” he said.

After Beijing banned initial coin offerings (ICOs) in September 2017, Zhao came under pressure from friends and associates to quit the business. ICOs are a form of crowdsourced fundraising that use cryptocurrencies, whose transactions are recorded by blockchain, so he was seen as guilty by association.

Contrary to popular belief, the Chinese government has never stood against blockchain. The technology was included in the State Council’s technology blueprint three years ago and some local governments have applied it to administrative work. But none of those efforts compare with the powerful support of President Xi.

At a group study session for members of the Politburo, Xi said blockchain would play “an important role in the next round of technological innovation and industrial transformation,” according to a report by state media Xinhua on October 25.

The China blockchain stock index, compiled by Wind and based on nearly 100 companies, closed up nearly 9 per cent on the first trading day after Xi's remarks were reported. NASDAQ-listed Xunlei, The9 and CNET, all involved in blockchain development, saw their shares shoot up 108, 21 and 16 per cent respectively.

Bitcoin also rose sharply over the weekend after Xi’s remarks, breaking the US$10,000 mark after lingering around US$8,000, according to industry website CoinDesk.