This 2020, the country would continue developing blockchain projects as well as its digital currency, the yuan.
China has been one of the countries that have been very interested in using and studying blockchain technology. However, the levels of investments in this area dropped by 40% in 2019 compared to those of 2018.
Chinese blockchain spending in areas of investment and financing deals has dropped, according to a new study by state-run sources.
During 2019, China had 245 investment and financing deals, which is nearly 60 % less than in 2018.
The joint study was conducted by China’s government-run financial information and media firm, Xinhua, and by financial data platform Rhino Data. The results were posted on the official website of Xinhua. There, it is explained that the total amount spent in blockchain investment deals has accounted for 24.4 billion Chinese yuan (US$ 3.6 billion). This co-authored report specifies that the figure dropped 40.8 % in 2019, compared to that of 2018.
In this way, these deals purportedly amounted to a sum of $3.5 billion in capital invested, which is purportedly more than 50% lower than the invested sum during 2018, according to a Decrypt Media translation.
The deals were purportedly focused on three main sectors in the blockchain space: Blockchain media and industry information, Digital asset exchanges (which can operate outside of China but be developed within the country), and Decentralized finance (DeFi).
Cryptocurrency giant Binance is an example of this trend. This year Binance made a large deal with Chinese blockchain information.
China and Blockchain
In later October 2019, Xi Jinping, President of China, said it was a good idea for the Asian country to use and boost blockchain technology. He said blockchain is a “core technology” to the nation’s future success that worked in catalyzing the nation’s growing love for the technology.
Important companies and organizations such as the Industrial and Commercial Bank of China (ICBC), TikTok operator ByteDance, and Baidu have launched initiatives that involve blockchain technology.
Both the value and number of deals have significantly increased since 2017, according to the report. But the year of 2018 remains the peak in terms of blockchain investment spending for China so far, with over 600 deals taking place during all the year, while 2017 accounted for just 168 deals, according to the data.
In the study, Xinhua and Rhino Data found that early-stage investments like Series A funding rounds accounted for 43.3% in 2019, whilst the proportion of strategic investment and mergers and acquisitions in the second half of 2019 increased significantly.
Besides, 292 institutions have participated in those investments, with Beijing, Shenzhen, and Hangzhou attracting the biggest blockchain projects so China continues working in blockchain projects although the country does not accept transactions with cryptocurrencies.
In late 2019, Xinhua cited a study conducted by the American market intelligence firm IDC. The study predicted that the country’s spending on blockchain technology will exceed $2 billion in 2023.
Alongside funding blockchain initiatives, the Chinese government is also working in a government-backed digital currency, the digital yuan. In this way, the People’s Bank of China researched the CBDC for five years before putting forward its first pilot of the currency in December 2019.
This 2020 could be the year for launching this digital asset that will be another form of payment in the Asian country.
By María Rodríguez