China Uses Blockchain to Mitigate Coronavirus Damage
With the coronavirus outbreak, China has been forced to delegate close to 80 billion dollars in funds in attempts to control the spread of the virus. However, possibly the most damaging economic fallout from the coronavirus is it’s impact on the small to medium sized businesses that make up over half of China’s economic power. With Chinese businesses under an inordinate amount of pressure from the virus outbreak, stemming from loss of employees, mandated extension of holidays, and other friction, the flaws experienced in Chinese business practices are becoming even more threatening. In general, many businesses in China feel distrust towards fellow companies as they struggle with data sharing, verification inefficiency, and more. In attempts to mitigate the economic friction caused from damaging Chinese business practices being brought to the forefront in combination with the economic duress from the virus outbreak, China has developed and begun to implement a blockchain system to lend out cross-border loans to small businesses across the nation. According to China’s State Administration of Foreign Exchange, since the introduction of the blockchain system last March, around 16 billion dollars worth of loans have been processed through the system. During the coronavirus period, 87 businesses have received over 250 million dollars in support through this blockchain system.
The benefits of the blockchain system is potentially enormous, as it allows for extremely efficient processing of foreign currencies, and inherently grants the ability to record and retrieve virtual ledgers of recorded payments, allowing for fraud to be quickly identified. China is hopeful that their blockchain system will be able to help fix the short term economic pains caused by the coronavirus and the long term issues presented by current Chinese business practices.
Keith Knutsson of Integrale Advisors commented that, “The blockchain system implemented by China might not only solve some of their temporary issues, but could be a glimpse into the future of economies.”