Editor's Note: This article is part of Preview Policy Report for the 2018 China-EU Summit, which will be jointly published by China Watch Institute — the new think tank platform powered by China Daily — and Bruges-based EU-China Research Centre of the College of Europe.

Foundational technologies, such as the internet or mobile connectivity, grow with difficulty. New technologies often attract a wide variety of developers, media and even speculators. In Europe, the blockchain is now based on innovation in and around technology and theory, while in China, the application and public chain are quickly spreading. It is also worth noting the high level of activity in China, specifically, Shanghai and Beijing. 

So blockchain is one of the decentralized infrastructure technologies which are also part of IT infrastructure. Three elements should be considered: security, networking and storage. Beyond the technology, decentralized applications (Dapps) are still popular or widely used in both China and Europe.

At this stage, in China, people are more interested in the public chain because of shortcomings in the existing infrastructures. But there are more steps to go. Last year, the China Distributed General Ledger Basic Agreement Alliance was established and was aimed at the more practical protocol or public chain. Many Chinese public chains or protocols with different characteristics have been developed. Most industrial Dapps in China are waiting for the right time, explicitly speaking, the time that public chains are more practical or suitable for the new economy. Also, the applications are popular not only among entrepreneurs but also in government institutions.

The Chinese government has given strong support to the technology and Dapps, for example, in the Hangzhou Blockchain Industry Zone. Governments offer much cheaper places and special support funds. The Hong Kong Monetary Authority plans to launch a project using distributed ledger technology for trade finance cross-border infrastructure. Big companies and banks are establishing new departments to figure out how the blockchain can be used.

With the comparison of European blockchain technology, new concepts are more ambitious and revolutionary. The importance is that deep-level transient spectroscopy (DLTs) and blockchains are something much broader than Bitcoin or its analogue Ethereum. New paradigms for the market or public governance have been put on the agenda. It is thrilling that the European Parliament and European Commission are working closely to bring the benefits of DLTs closer to realization and to create a secure ecosystem around it for European citizens and also develop their own leadership in the world for the next stage. Estonia has become the first digital country with de-intermediation offering public services and social communication. The first international blockchain center in Europe, the Blockchain Centre Vilnius, was held in Vilnius, Lithuania. Innovation is not just on the organization between institutions and corporations, but also in the theory. Relating to the economic theory based on the new technology developed, the protocol will be designed in whole new way to establish a flexible platform for enabling new distributed business and interaction models based on direct peer-to-peer exchanges without the need for centralized platforms or intermediaries. Dapps in Europe have been widely used.

As a result, with the differences between both sides, there are lots of opportunities to enhance cooperation to enhance the world. In addition, government opinions are a bellwether. Nowadays there are still very few civilian organizations and enterprises focusing on promoting the development of blockchain industry in the long run. There are organizations whose investment and consulting business see better communications like the Digital Renaissance Foundation and Digital Enlightenment Capital. Civilian institutions or enterprises organized in the academic forum and visits to European universities such as University of Helsinki and the Technical University of Berlin. This is also the case in the business world and the entrepreneurial community in Berlin, Estonia, Finland such as Latitude 59 in Estonia, Arctic 15 and Slush in Finland. Asia week and Blockshow in Berlin are also examples. Even better, meetups based on the projects are the most frequent activities the civilian organizations in both China and Europe which provide both sides and institutions a path forward.

Policy recommendations:

1) Creating opportunities for experts and practitioners between China and Europe on blockchain technology. Bilateral meetings between governments and associations can make the technology go further and enterprises’ visits and communications will contribute to the growth in Dapps.

2) Funds of funds can be jointly established both in China and Europe to invest in the blockchain industry. Finance always help the economy. What’s more, FoFs can be a better form for governments to manage.

3) The regulatory authorities on both sides can set up a special working group to coordinate bilateral regulation and unify regulatory standards.

4) In educational aspects, although there are existing academic institutions and joint academic activities are the next step to help raise the new expert-based de-centralized economy and ecosystems.

Blockchain technology has the power to transform how we do everyday tasks, reinventing economics and the exchange of information as it does so. The European Union is striving to make Europe a leading region of global development and investment zone in blockchain technology. China will continue to accelerate the construction of the public chain and other value internet infrastructures, and actively build the industrial ecology of the blockchain with Chinese characteristics. Both China and Europe are going so fast that we should cooperate with each other to give the world the leadership.

Yin Cao is the founder of the NengLian Tech, the consultant of Estonia e-residency planning, and chief blockchain expert of XinDa securities. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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