Chinese businesses are investing heavily in blockchain, according to a new report from market intelligence firm the International Data Corporation (IDC). The report, released yesterday, predicts that Chinese businesses would spend $2 billion on blockchain by 2023, with a compound annual growth rate of 65.7 percent from 2018 to 2023. 

This year alone, the IDC found that China had spent $319 million on blockchain—around half of what Western Europe spent ($674 million), and around a third of US spending ($1.1 billion). “The data in the Expenditure Guide shows that, as companies increasingly understand the benefits of blockchain technology… the adoption rate and growth rate of the technology are accelerating,” said James Wester, Director of Global Blockchain Strategy Research at IDC. 

IDC’s research shows that the banking industry is the biggest spender when it comes to blockchain, followed by manufacturing and retail. Transaction management, cross-border payment and settlement, and product traceability rank highest. 

China’s regulators target blockchain

As Chinese businesses ride the blockchain-train, so does the government. Late last month, China’s president, Xi Jinping praised blockchain as an important breakthrough, and said that it will help to add economic and social value to the country. Per the president, blockchain is “a key breakthrough that can facilitate China’s progress in core technologies.”

However, that doesn’t mean that all blockchain projects are created equal, as far as the Chinese government is concerned. Just today, news surfaced that the China Securities Regulatory Commission (CSRC) has begun an investigation into Guangdong Great Wall Group, a porcelain company known for its blockchain investments, whose stock increased for five consecutive days following Xi Jinping’s announcement.

Yesterday, state paper the People’s Daily stressed the difference between “rational”, blockchain-based investments and projects used to “hype up aircoins”. The paper suggested ““inclusive and prudent regulation” that “prohibits transgression”. Using blockchain to “store and spread illegal information”, for “illegal transactions” like money laundering, “should be severely punished.” 

Experience Web 3.0.

Be the first to get Decrypt Members. A new type of account built on blockchain.

The Chinese blockchain boom

Blockchain is booming in the wake of Xi Jinping’s endorsement. The price of Bitcoin rose by 24 percent the next day; stocks in blockchain-companies skyrocketed; and the China Communications Industry Association suggested that October 24 be forever celebrated as “Blockchain Day.” 

That’s not all: “Xuexi Qiangguo” (学习强国), an app designed to educate Chinese nationals about the thoughts of President Xi, now encourages the public to study an Introduction to Blockchain course. The central bank is also developing its own Central Bank Digital Currency (CBDC), and has ramped up development to beat Facebook’s Libra project.

But the Chinese government’s newfound enthusiasm for blockchain might have nothing to do at all with those principles of decentralization and liberation that energizes Silicon Valley’s finest. 

Chinese regulators heavily vet blockchain company registrations. According to an article tweeted by crypto analyst Dovey Wan that highlights the legislation, regulatory authorities must inspect the infrastructure, and supervise the node, to prevent misuse. 

And an article by Decrypt last week pointed out that, because the government’s central bank will issue the digital renminbi to banks and large fintech companies, and Chinese citizens, the government will have access and control over its citizens’ data. “With blockchain comes tracking, and with tracking comes zero anonymity,” wrote Shuyao Kong.

So, though China might seem to have about-turned on blockchain, it might not be the revolution envisaged by many.