China announced a scheme to construct a nationwide blockchain network. The initiative was detailed in a policy paper titled “Opinions of the CPC Central Committee and the State Council on Developing New Productive Forces,” which Xinhua, the state news outlet officially released the document widely to the public earlier this week.
The document made no mention of Bitcoin or other independent cryptocurrencies, which remain banned in mainland China since 2021. China operates its own sovereign digital currency, the digital yuan, and has recently increased the number of banks authorized to operate digital yuan services.
China already invests in blockchain technology, with a Blockchain-based Service Network (BSN) that supports enterprise and government applications but prohibits cryptocurrencies like Bitcoin. The new system may build on BSN, although this is unconfirmed.
The document also called for a better integration of the Chinese digital and real economies through the digitalization of the manufacturing industry and the construction of a “national integrated computing power network.” The “Eastern Data, Western Computing” project aims to store data generated by China’s eastern regions in the less-developed western regions.
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Officials responsible for the digital transformation are advised against “abandoning the real economy for the virtual economy” and creating bubbles. The Central Financial and Economic Affairs Commission and the National Development and Reform Commission will implement and regulate the expanded digitalization.
In response to the news, investor interest in China-linked blockchain project Conflux (CFX) has increased, with CFX surging to highs of above $0.07 on Sunday. Conflux is widely seen as the only regulatory-compliant public blockchain in China due to its close ties with state-backed corporations and its founders’ connections to Tsinghua University.
While the country has banned private cryptocurrency trading, it continues to develop its own digital currency and invest in blockchain technology.