According to China’s Ministry of Industry and Information Technology (MIIT), announced yesterday, the Chinese government is creating an official committee for the standardization of blockchain and distributed ledger technologies. The initiative is still in its preliminary stage, working within the framework of ISO/TC 307.

This is the continuation of China’s ongoing effort of regulating blockchain technology and its potential applications, and it looks to be in line with some other engaged national governments. The news itself is nothing to be excited about, but its backdrop, the current situation of China’s blockchain community, is much more interesting. For that information, please refer to our comments below.

Allegravita’s comments

It’s worth mentioning that the rise of blockchain and cryptocurrencies has caused considerable economical and political unease in China in recent months. A massive game of “cat and mouse” has been played in China, with the government trying to cease rogue activities with new regulations almost every other week, and crafty entrepreneurs circumventing them with freshly discovered loopholes immediately after.

So far, the Chinese government has outlawed all initial coin offerings (ICOs), cracked down on cryptocurrency exchanges, and prohibited banks and financial institutions from facilitating any cryptocurrency-related transactions.

For countermeasures, the Chinese cryptocurrency industry has moved exchanges to overseas servers, channeled funds to foreign banks, and concealed communication with private QQ or WeChat groups.

As people are breaking the mould by exploring blockchain’s applications other than cryptocurrency, the connotation of the concept “decentralization” is nudged toward the spotlight. “Center” (or “central”) is a politically loaded word in Chinese. The centralized governance of the Chinese Communist Party, and its central position within China’s political system, is the prerequisite of any discussion. The idea of a system without a center has an innate subversive or usurping connotation. Some have pointed out, being overly sensitive or not, that in the White Paper for the Development of Blockchain Technology and Applications in China released by none other than the MIIT itself as early as 2016, the word “decentralized” was translated as “分布式” (distributed).

Politically-savvy businesspeople have taken the cue. Over the previous weekend, Mr. Xu Mingxing, the founder of cryptocurrency exchange OKEx.com, posted in his WeChat Moment update that:

[Allegravita translation]: Translating “decentralization” as “去中心化” (literally: decentralization) is gravely misleading. I suggest revising the translation as “点对点” (literally: peer to peer). For any application of blockchain, the maker of rules is a fundamental center. Applications on a national level should eliminate inefficient, opaque “small centers”, and better maintain the master center that is the Party and the State.

As a leading China expert consultancy, Allegravita is acutely aware of new technologies, trends, and patterns emerging in the Middle Kingdom, as well as their impacts on the market. We keep a watchful eye on the development of blockchain and cryptocurrency in China, and we welcome your inquiries. Please don’t hesitate to contact us.