Author: Wang ZeLong Editor: Tong Source: PANews
Governments have an inseparable relationship with the world of encryption. Not only are they extremely fast and efficient at mastering the technology, understanding the trends, and establishing relevant industry laws and regulations, but they have also begun purchasing blockchain technology services, assisting the market’s invisible hand in guiding the industry.
We have already provided our readers with statistics and figures regarding the US government’s purchases of blockchain technology services, so we thought it only fitting we do the same for China. PANews used “blockchain” as the keyword of a search on the Chinese government purchasing information platform, the Chinese Government Purchasing Website. Our search provided information on blockchain technology purchases by all levels of government agencies and public institutions since China’s first ever blockchain technology purchasing project on December 12, 2016, until September 24, 2019.
57 Agencies and Institutions in 12 Provinces and Municipalities
Our initial search came back with 154 hits regarding agencies and institutions who had submitted a call for bids to blockchain technology providers. After filtering out the calls for bids that had fallen through and those that were repeats, we whittled that number down to a total of 57. Of these 57 bids, 9 were still in the bidding process and 48 had already been closed.
Based on the different types of blockchain projects and the different purchasing units, PANews divided the 57 projects into 7 categories: education and scientific research, finance, border and customs control, transportation, employment and entrepreneurship, agriculture and rural services, internet security, social security, and healthcare. The number of projects per category and their percentage of the total are shown in the graph below.
In terms of who is taking on these blockchain projects, the agencies and institutions of local governments make up the absolute majority with a total of 39 accounting for 68%. The remaining 32%, a total of 18, are being carried out by central government agencies and institutions.
These 57 projects are being carried out in 12 provinces and municipalities: Beijing, Guangdong, Gansu, Guangxi, Yunnan, Shandong, Henan, Sichuan, Jilin, Shanghai, Heilongjiang and Hubei. Due to the fact that central government agencies and institutions are mostly located in Beijing, it hosts the most projects with 24, accounting for 43.64%. Guangdong hosts the second largest amount with 8, accounting for 14.55%.
Let’s take a look at the money going to these projects. PANews analyzed it using three measurements, the budgeted amounts, actual transaction amounts and the amounts spent specifically on blockchain technology services . The total amounts of the three measurements came to 199 million, 130 million and 52 million RMB (approximately 28.4 million, 18.6 million, 7.4 million USD) respectively.
From these amounts we can see that China’s government and its public institutions are quite serious about the investment and development of blockchain technology. These numbers are even more impressive if we look at their average yearly growth rates. The same amounts grew an average of 453%, 724% and 1188.5% per year over the last few years.
The 46 companies who won blockchain project bids are registered among 11 provinces and municipalities: Beijing, Shanghai, Guangdong, Gansu, Sichuan, Shandong, Henan, Guangxi, Hubei, Fujian and Guizhou. The number of winning companies per location and their percentage of the total are shown in the graph below.
Among these 46 blockchain service providers, 2 have made it onto the first list of domestically approved blockchain service providers published by the Cyberspace Administration of China. The companies are DataQin Technology Ltd. from Zhejiang and Union Mobile Financial Technology Ltd. from Beijing. The former mainly focuses on the integration of blockchain technology in judicial affairs and the storage of digital records. The latter focuses primarily on the integration of blockchain technology and financial compliance, supply chain, international payment systems, international trade and financial services, real-time penetrative monitoring and the tracking and tracing of digital records. To put it in perspective, the parent company of Tencent Cloud (Beijing) Ltd., Shenzhen Tencent Computer System Co., Ltd. , is also on the list of qualified providers.
Among these companies are also some big names such as Ernst & Young (China) Ltd., one of the Big Four accounting firms, who provides blockchain consulting services to the National Customs Information Center. Beijing University of Posts and Telecommunications (BUPT), the prestigious university known for its teaching and research in the fields of telecommunication and computer engineering, provides the China Cybersecurity Review Technology and Certification Center with blockchain technical support for their information security system. Huawei Ltd. provides blockchain technical support to the Beijing Municipal Bureau of Economy and Information Technology in their push to develop and implement big data. CNCERT, as the core coordinating unit in China’s national internet security emergency response system, provides its governing agency, the Office of the Central Cyberspace Affairs Commission (the Cyberspace Administration of China), with blockchain services regarding information security evaluation as well as assistance in the construction of their blockchain information services record system.
Tsinghua University Made the First Purchase. The Largest Purchase to Date is 27.08 million RMB.
Some other projects have caught the attention of PANews as well.
The first government agency or institution to purchase blockchain technology services in China was Tsinghua University on December 12, 2016. The purpose of the project was to provide a blockchain data protection system for the National Engineering Laboratory for E-Commerce Technologies. Tsinghua University paid 900 thousand RMB (approximately 129 thousand USD) for the services. This was the only government purchase of blockchain technology services in 2016.
The largest single purchase of blockchain technology services took place on August 7, 2019 for 27.08 million RMB (approximately 3.9 million USD) by the Beijing City Haidian District Government Affairs Services Management Bureau. The blockchain service provider was asked to use Haidian district as a test site for various blockchain applications such as the establishment of a general blockchain operating platform, a blockchain service system for business support, and a blockchain secured open authentication system.
Some other very interesting projects have been launched. For instance, the Gansu Tourism Development Commission came up with the idea of a blockchain platform for selling tour guide services and other tourism products. This project is an attempt at applying blockchain and smart contract technologies to the tourism industry by building a secure and trustworthy online travel agency and an online platform for booking trustworthy and accountable tour guides. As this system matures, tourists will no longer have to worry about being scammed during their travels.
Another interesting example comes from the Chinese Lottery Issuing and Management Center which came up with the idea to use blockchain and smart contract technologies to research and develop a lottery drawing system where winning numbers can be authenticated and verified. The project researches ways to use the open and transparent nature of these technologies to ensure that the drawing process is fair and reviewable. As this project continues to develop, the lottery industry in China, which has long drawn criticism for operating behind closed doors, may gradually open up and become more transparent.
Comparison Between the Chinese and US Governments’ Use of Blockchain Technology
On the other side of the Pacific Ocean, the US government has also taken on a number of blockchain technology projects. According to a survey by The Block, a US blockchain media outlet (once authorized by PANews to translate and edit our content), the US federal government’s investment in blockchain technology services saw a three-fold increase over the past 3 years, reaching a total of approximately 10 million USD (70 million RMB). In roughly the same period, the Chinese government’s total investment was approximately 200 million RMB (28.6 million USD). Over the past few years, the amount that China has invested into blockchain technology has multiplied by an average of 12 times per year.
These figures show that the demand for blockchain technology among the Chinese government is growing much faster that of the US government. However, it is safe to say that China’s total investment into blockchain technology is still far behind that of the US. The Block’s survey only included projects at the federal level of the US government. Like China, many projects in the US are carried out by local governments, and if these were accounted for in the survey than US investment would surpass that of China.
In terms of blockchain technology service providers, in China most of them are traditional companies and agencies such as Huawei, Tencent, BUPT and the information technology departments of the government. Whereas in the US, government needs are typically being met by companies that have started and grown in the blockchain industry, such as Chainalysis and Elliptic.
Moreover, the services provided in China come from a much larger and more scattered pool of suppliers. In China, services for the 57 projects are being provided by 46 different suppliers. Also worth noting is that the three suppliers who have been awarded the most projects, Union Mobile Financial Technology Ltd. from Beijing, Taiji Computers Company Ltd. from Beijing, and CNCERT, have only taken on an average of three projects each.
The picture in the US is very different. The provision of blockchain services to the US government has essentially been monopolized by a small number of companies such as Chainalysis, Elliptic, Neutrino, and CipherTrace. Of these, Chainalysis dominates the market with 92.2% of total government purchases with the other 8% going to Elliptic, Neutrino and CiphterTrace.
 In regards to the budgeted amounts, actual transaction amounts, and the amount spent specifically on blockchain technology services of these purchases, some of the figures are not yet available on the Chinese government purchasing website. For instance, in some announcements the amount spent specifically on blockchain technology services were not disclosed, therefore they are not included in the statistics. Thus, the numbers of the three measurements provided in this article may not reflect the actual numbers.
 The Office of the Central Cyberspace Affairs Commission and the Cyberspace Administration of China refer to the same agency with two different titles. It is a ministerial level subordinate agency of the Central Committee of the Communist Party of China, and also the operating agency of the Central Cyberspace Affairs Commission. It is sometimes also referred to as an operating agency of the State Council, given responsibility by the State Council for the law enforcement of internet content management in China.