Chinese Ministry Expects 2018 To Be Another Blockbuster Year For Blockchain

After strong growth in China’s blockchain industry last year, 2018 is set to be another blockbuster year for the industry with record amount of capital to be injected into companies in the space, according to China’s Ministry of Industry and Information Technology (CCID).

In a whitepaper published on May 20, the ministry said there have been 249 investment deals in blockchain companies in China to date. 60 funding rounds were recorded in 2016, five times more than the year before, and 2017 saw particularly strong growth with nearly 100 investment deals recorded. 2018 started off healthily, with 68 investment deals registered in the first quarter alone, demonstrating accelerating growth.

At the end of March 2018, China was hosting 456 Chinese blockchain companies, almost twice as much as of the end of 2016 with 256 companies. The number of new blockchain companies added each year increased from 45 in 2014, to 136 in 2016 and 178 in 2017.

“The industry is developing rapidly with more and more entrepreneurs and capital entering the market,” the whitepaper notes.

Most of Chinese blockchain companies (295 companies) focus on blockchain applications, followed by applications in the real economy sectors (109 companies), and finally financial services (86 companies). 80% of Chinese blockchain companies are based in Beijing, Shanghai, Guangdong and Zhejiang.

Alongside China’s thriving blockchain startup industry, the country’s own technology giants are ramping up blockchain development, the report notes. Tencent’s TrustSQL is building an enterprise level blockchain infrastructure service platform. Meanwhile, Alibaba is applying blockchain to non-profit organizations, product traceability, home rental and insurance. Baidu teamed up with partners to launch China’s first blockchain-supported asset-backed security project and blockchain-based ABS exchange. JD.com is using blockchain for supply chain and product authenticity.

The release of the whitepaper comes a few days after the CCID released its monthly ratings index on 28 cryptocurrencies and the blockchain platforms behind them. Ethereum was the top-ranked cryptocurrency while Bitcoin only came in at 13^th place.

The rating regime follows the establishment of a national standard for blockchain by China. Beijing said the guidelines will be ready by the end of 2019 and will cover the basics, business application and security.

China has banned initial coin offerings (ICOs) and shut down domestic exchanges and blocked all websites related to cryptocurrency trading and ICOs, including foreign platforms. Despite the crackdown, China has identified blockchain as a key growth area and has been encouraging investment in the technology.

In April, the government of Hangzhou, the hometown of China’s e-commerce giant Alibaba, said it would invest in a 10 billion yuan (US$1.6 billion) blockchain fund to support blockchain projects.