China Launches National Blockchain As Part Of Wider Plan To Accelerate Expansion Of Digital Economy

China has unveiled a plan to build a national blockchain network, but the Asian power's planned investment about the technology does not appear to equate to a slackening restrictions on private cryptocurrency trading, which remains banned in mainland China.

The measure was announced in a policy document entitled "Opinions of the CPC Central Committee and the State Council on Developing New Productive Forces." The document was made public by the official Chinese state news agency Xinhua on Friday.

The document made no mention of Bitcoin or other independent cryptocurrencies. Since 2021, Beijing has enacted a blanket ban on all cryptocurrency transactions. The ban extends to foreign cryptocurrency companies who attempt to provide services to people living in mainland China.

China does, however, operate its own sovereign digital currency, the digital yuan. Beijing has recently been encouraging its citizens to increase their use of the digital currency, having recently increased the number of banks authorized to operate digital yuan services from 22 to 30 in August.

China also already invests in blockchain, the technology which enables the existence of cryptocurrencies. China currently has a Blockchain-based Service Network (BSN), a state-backed platform which supports enterprise and government applications but prohibits cryptocurrencies like Bitcoin from operating on its rails.

It is possible, though unconfirmed, that the new system will build on BSN.

The document also called for a more comprehensive integration of the Chinese digital and real economies through the digitalization of the manufacturing industry, the construction of a "national integrated computing power network" and the implementation of the "Eastern Data, Western Computing" project, a mega-infrastructure venture designed to store data generated by China's economically productive and densely populated eastern regions in the less-developed, more sparsely-populated but resource-abundant west of China.

However, officials responsible for the digital transformation are also advised against "abandoning the real economy for the virtual economy, pursuing large-scale and comprehensive development, or creating bubbles."

The two government bodies in charge of implementing and regulating this expanded digitalization will be the Central Financial and Economic Affairs Commission and the National Development and Reform Commission. These two organizations will likely determine how the new blockchain network is integrated into wider Chinese digital infrastructure.

In response to the news, investor interest in China-linked blockchain project Conflux (CFX) has increased, with CFX steadily increasing since Saturday morning and surging to highs of above $0.07 on Sunday. At 8am EDT on Sunday, Conflux was hovering at $0.066, up more than 26% from Saturday's closing price.

CFX is widely seen as the only regulatory-compliant public blockchain in China because it works closely with state-backed corporations, does not sell unregulated tokens within Chinese borders and its founders have close professional and academic ties to the state-run Tsinghua University.