[The Epoch Times, July 18, 2021](Reported by The Epoch Times reporter Long Tengyun) In June this year, the Ministry of Industry and Information Technology of the Communist Party of China and the Office of the Cyberspace Administration of China jointly issued guidance on accelerating the promotion of blockchain technology. The internal documents obtained by Epoch Times reveal that the CCP has been planning for this for a long time and has vigorously promoted the blockchain in many internal areas, with the intention of seizing the commanding heights of the next-generation Internet.
On June 7, the Ministry of Industry and Information Technology of the Communist Party of China and the Central Cyberspace Administration of China (the highest regulatory agency for network review) issued the “Guiding Opinions on Accelerating the Application and Industrial Development of Blockchain Technology.” This is the first clear industrial development plan formulated by the CCP to promote the blockchain technology to “reach the world’s advanced level” after the blockchain was included in the top-level design by Xi Jinping.
Blockchain is an emerging technology known as the next-generation Internet, and has been promoted as an important field by the CCP in recent years.
In March of this year, the CCP listed the blockchain as one of the seven key industries of the digital economy in the “14th Five-Year Plan”. In October 2019, Xi Jinping led the Politburo to collectively learn about blockchain. In 2016, the blockchain was included in the “13th Five-Year” national informatization plan by the State Council.
Exclusive: The CCP internally promotes blockchain in multiple fields
Many government documents of the CCP indicate that the CCP is stepping up the promotion of blockchain internally.
According to an internal document of the Jiangsu Provincial Government of the Communist Party of China,In accordance with the spirit of Document 9 and the documents of the Cyberspace Administration of China, the Development and Reform Commission and other ministries and commissions, Jiangsu Province has decided to set up an inter-departmental team to coordinate and promote the application and development of blockchain in various fields such as digital government, smart cities, justice, finance, and communications. The overall coordination mechanism includes 32 departments including the Provincial Party Committee’s Cyberspace Administration, the Provincial Party Committee’s Propaganda Department, the Provincial Development and Reform Commission, and the Public Procuratorate and Law Department. The Cyberspace Administration is the lead unit.
An internal document from the Dandong City Court in Liaoning Province of the Communist Party of China disclosed that in 2020, the Dandong Intermediate People’s Court has undertaken the construction of the province’s “Judicial Blockchain Management Platform” application demonstration project.According to the Supreme Law of the Communist Party of ChinaIn Document 9, the Liaoning Higher People’s Court and Dandong Intermediate People’s Court respectively won the second and third prizes of the “Judicial Chain” application pilot in 2020. “Judicial Chain” is a pilot project for the application of blockchain in the court system of the Chinese Communist Party.
Several documents from the Dalian Municipal Law Commission of Liaoning Province revealed that the Dalian Municipal Government has applied blockchain technology to “grid” stability maintenance and “snow-bright project” monitoring.
A notice issued by the Luoyang Municipal Government of Henan Province of the Communist Party of China in January this year indicated that the local area is “building a “blockchain” industrial ecology with blockchain technology as the core and covering digital finance, Internet of Things and other fields.” The document discloses a key blockchain project with a planned investment of 50 million yuan, which will start in January 2019 and be completed in December 2021.
The government documents of Guilin, Gaocheng, Xingtai, Shijiazhuang and many other places show that the local area has promoted the application of blockchain in various fields such as urban development, digital economy, and stability maintenance.
Behind the CCP’s promotion of blockchain
The documents obtained by The Epoch Times confirm that the CCP attaches great importance to blockchain. However, the reason why the latter can win the favor of the Xi authorities is still due to the technical characteristics of the blockchain itself.
1. The core idea of the blockchain: decentralization
Block chain is derived from the distributed accounting technology of encrypted currency “Bitcoin”. Its core concept is “decentralization”, that is, through distributed accounting and smart contracts, a data chain with irreversible timing is constructed.
Simply put, blockchain technology allows each user to participate in accounting (transaction) anonymously and become a distributed node, thereby solving the trust problem in human economic activities.
Decentralization (point-to-point), non-tampering, traceability (leave traces throughout the process), openness, and anonymity are the hallmark features of blockchain technology. This kind of technological concept and characteristics are naturally opposed to the CCP’s autocratic philosophy and extreme desire for control.
According to application scenarios, blockchains can be divided into three types: public chains, alliance (industry) chains, and private chains. The technologies they implement are essentially the same, but the difference lies in the degree of “decentralization.”
The public chain is also called a non-permissioned chain. There are no access restrictions, the highest degree of decentralization, and no monitoring; currently most cryptocurrencies such as Bitcoin are public chains. The latter two have access restrictions and require permission to participate. They only achieve partial decentralization and may be monitored by the service provider (center).
Chen Chunzeng, academician of the Chinese Academy of Engineering and director of the Blockchain Research Center of Zhejiang University, pointed out in an interview in 2019 that the blockchain technology that the CCP wants to develop is mainly a consortium chain; because the public chain has the characteristics of decentralization and non-tampering, it is difficult to supervise. The authorities’ supervision of the alliance chain is relatively controllable, so the alliance chain may be applied on a large scale in China.
2. The core requirement of the “CCP version” blockchain: centralization
In fact, the relevant laws and regulations promulgated by the CCP have stifled the core concept of blockchain “decentralization” from the legal level.
For example, the Cyberspace Administration of the Communist Party of China (also known as the National Internet Information Office) promulgated the “Regulations on the Administration of Blockchain Information Services” in January 2019 (link to the Cyberspace Administration of China). Article 8 of the regulation stipulates that, in accordance with the requirements of the CCP’s Cyber Security Law, blockchain users must perform “authentication of true identity information”, and blockchain services that are not authenticated will not be provided.
This means that the blockchain technology under the governance of the CCP must be “centralized.” Whether in any application scenario of individuals, enterprises, or governments, the technical features of blockchain such as peer-to-peer and anonymity must be open to service providers (centers) controlled by the CCP authorities.
Under the premise of “centralization”, the technical characteristics of the blockchain such as traceability and non-tampering will be used by the CCP, turning the “CCP version” of the blockchain into a weapon to strengthen the party’s overall control.
In contrast, blockchains that are truly decentralized and not monitored are deemed illegal by the CCP, including cryptocurrencies such as Bitcoin.
However, it wasn’t until May of this year that the CCP began to crack down on cryptocurrencies, including completely banning the Bitcoin “mining” industry.
The sudden suppression of cryptocurrencies by the CCP has accelerated the collapse of Bitcoin prices. This move is suspected to be related to the power consumption of Bitcoin mining, but more observers believe that the CCP is clearing the way for the expansion of the digital renminbi.
3. The intention of the CCP to speed up the promotion of blockchain and digital renminbi
The Digital Currency Electronic Payment (DCEP) launched by the CCP is different from almost all other cryptocurrencies.
The Central Bank of the Communist Party of China has repeatedly emphasized that although the natural attribute of cryptocurrency is “decentralization”, the digital renminbi insists on “centralization”; DCEP only draws on Bitcoin elements such as traceability and non-tamperability, and does not use blockchain technology. .
Simply put, the core concept of cryptocurrency based on blockchain technology is to provide users with anonymous, safe, unmonitored and restricted currency services through decentralization.
The digital renminbi is on the contrary, through centralization, the entire process of currency circulation and all users are fully included in the CCP’s supervision.
Since the digital renminbi (DCEP) runs counter to the real cryptocurrency, why does the CCP designate DCEP as legal tender and use the name “cryptocurrency” to vigorously promote it domestically and overseas?
The Epoch Times reported last year in “An Article Understand Why the CCP Urgently Pushes Digital Currency” (link), which pointed out that the CCP may have two major purposes. One is to use DCEP to tightly control Chinese wallets, including monitoring and blocking capital flight. The second is to use DCEP to accelerate the internationalization of the RMB and compete with the US dollar for hegemony.
Since last year, the CCP began to purge China’s most popular electronic payment methods such as Alipay and WeChat Pay, as well as the removal of domestic cryptocurrencies, which have been interpreted by the outside world as paving the way for digital renminbi.
The CCP’s ambitions in the field of blockchain are gradually emerging
In fact, under the promotion of Xi Jinping’s administration, the Chinese version of the blockchain has temporarily gained a certain advantage in international competition just like Huawei’s 5G.
1) The CCP is fighting for the right to speak in the blockchain field:
According to a report by the international authoritative intellectual property magazine IAM in March this year (report link), China’s blockchain patent “average strength index” leads the world.
According to data from the international authoritative database Derwent World Patent Index (DWPI), as of 2020, the top ten Chinese companies have submitted a total of 3,066 blockchain “patent families”, accounting for nearly one-third of the global total. Among the top ten rankings of Derwent blockchain patent families, nine of them are Chinese companies.
In December last year, the International Institute of Electrical and Electronics Engineers (IEEE) released the world’s first international blockchain standard, which was developed from a domestic standard formulated by the Ministry of Industry and Information Technology of the Communist Party of China.
The CCP claimed to have won the right to speak in the formulation of international blockchain rules. However, foreign media such as Voice of America pointed out that the CCP may not be able to finally achieve the dominant position of the blockchain because it cannot gain the trust of the international community.
From a technical point of view, the CCP’s requirement for “centralization” of the blockchain not only determines the inherently hostile stance of the two, but also leads to the issue of trust as the “CCP version” of the blockchain’s cul-de-sac.
2) Low-cost dumping of the CCP’s global deployment of the BSN blockchain network:
However, the CCP seems to want to repeat its successful course in international trade, trying to make the international market willing to accept the “CCP version of the blockchain” by dumping ultra-cheap server space, cloud services and other blockchain digital infrastructure.
On April 25, 2020, the “Blockchain Service Network (BSN)” led by the National Information Center officially launched global commercial use. The center is directly under the National Development and Reform Commission of the Communist Party of China. BSN has become the only blockchain infrastructure network in the world where the CCP has the right to access the network.
How cheap is the BSN blockchain service deployed by the CCP to the world compared to the United States?
According to the quotation on the Microsoft Azure blockchain pricing webpage on July 15 this year, a standard application scenario (3 nodes/250G capacity) in the Eastern U.S. region will cost about US$733.92 per month for blockchain services.
According to the calculation of the “BSN official website tariff calculator” (BSN link) that day, the monthly cost of the blockchain tariff for the similar service level (3 nodes/200G capacity) provided to the California area of the United States is about 871.8 yuan, which is equivalent to 130.77. US dollars.
By comparison, the blockchain service tariff provided by the Chinese Communist Party BSN to the United States is about one-sixth of that of the American service provider.
The CCP has not announced whether BSN provides ultra-low price blockchain services, whether it will cause losses, or how much Chinese taxpayers will spend each year to fill the shortfall.
However, Liu Yunan, director of the National Information Center of the Communist Party of China, said in a speech at the official launch of the BSN network that “we must take a long-term view.” Tan Min, secretary-general of the BSN Development Alliance, also admitted when explaining BSN’s operating conditions that BSN “does not aim for profit.”
According to Microsoft’s announcement, in September this year, Microsoft will shut down the Azure blockchain service. Microsoft did not explain the reasons for shutting down the blockchain service, only notifying all existing customers to switch to alternative services.
3) BSN network announces its global layout and development direction:
According to the “2020 Blockchain Service Network BSN Annual Summary” data (link) released in January this year by the BSN certified official account, as of the end of 2020, BSN has completed the deployment of 106 public city nodes around the world, including 98 domestic public City nodes and 8 international city nodes; service providers include China Mobile, China Unicom, China Telecom, and top global cloud service providers such as Amazon AWS, Baidu Cloud, Kingsoft Cloud, Microsoft Cloud, and Google Cloud.
China Mobile, China Unicom, and China Telecom, which participated in the construction of the BSN node, have been delisted by the United States because they are recognized by the US government as having a Chinese military background.
BSN has a number of core technology patents, and the network root key is kept by the CCP’s National Information Center.
BSN also disclosed the core development direction in 2021 in the “2020 Annual Summary”, including the construction of a global digital payment network, the intention to incorporate the digital currencies of central banks in the CCP’s BSN, and to build a global payment and settlement network based on the CCP’s BSN ( UDPN).
Current affairs commentator Li Linyi analyzed that the development direction of BSN in building a global digital payment network revealed the CCP’s financial ambitions to establish an international payment settlement system independent of the US dollar and to compete with the US dollar.
4) The “CCP version” blockchain penetrates overseas:
In addition to deploying blockchain infrastructure around the world, the CCP is also promoting the “CCP version” of blockchain applications overseas in many areas.
For example, in 2018, Alibaba’s Hong Kong version of Alipay, AlipayHK, opened the world’s first blockchain-based e-wallet cross-border remittance service.
Following the completion of the first crude oil blockchain import transaction pilot in December 2017, the state-owned Sinochem Group (Sinochem) completed the world’s first oil export blockchain application pilot involving government agencies in 2018.
In May 2020, China Baowu Iron and Steel Group completed the world’s first transnational blockchain letter of credit transaction, importing iron ore from Australia. The transaction is settled in offshore RMB.
The breakthroughs made by the “Chinese Communist Party” blockchain in bulk commodity trade show that the Chinese Communist Party is taking advantage of the One Belt One Road strategy, the world’s factory, and the world’s second largest economy to realize its technological ambitions in the blockchain field.
Li Linyi believes that “blockchain is actually a fatal threat to the CCP. Therefore, the CCP wants to seize the top of the blockchain. The version of blockchain seizes the global market and shapes the pattern of the blockchain field.”
“Like Huawei’s 5G, the BSN blockchain network and the digital renminbi are actually strategic weapons used by the CCP to fight for hegemony.” He predicted, “But they may follow in Huawei’s footsteps. After the political tasks hidden behind them are recognized by various countries, Eventually, it will cause vigilance and resistance from the international community.”
Editor in charge: Ye Ziming#