As blockchain technology is gaining widespread adoption in China, the number of firms working in its sector has skyrocketed. The authorities have reportedly registered more than 500 new blockchain projects that could revolutionize the future of digital ledger technology in the Asian powerhouse. However, investors of companies backing digital ledger technology cheered loudly recently as president Xi Jinping endorsed blockchains.
Good News for All
Stocks of more than 85 companies with extensive blockchain investments went up by 10% (the daily limit in Shanghai and Shenzhen equity markets), showing solidarity with Jinping’s views. It included big tech companies with significant blockchain investments as well as those that were only working with DLT on the peripheries of their business. Sans the daily limit, there are chances that the stocks could have climbed much higher.
The Shenzhen exchange witnessed an 8.9% increase to a blockchain-related equities index compiled by Wind, a market data provider. This is the index’s higher jump since April this year as all 52 components made significant advancements. The ChiNext Index, reflecting the technology stocks on the exchange, also rose by 2.2%.
A Huge Growth Potential
According to Pan Shaochange, Donguwe Securities’ equity analyst, “It’s all because of Xi… There’s still a long way to go to actually bring it to fruition at an individual and enterprise level.” However, he said that “the growth potential is huge.”
Beijing isn’t shy of promoting its idea of blockchain development. Recent reports suggest that the People’s Bank of China (PBoC) is developing its own state-backed digital currency which could be distributed using popular channels like AliPay and WeChat Pay.
President Jinping believes that blockchain is a “core technology” for China and urged more projects and investors to enter the space. The effects of the increased enthusiasm were also seen in Hong Kong which has recently been mired in political controversy as stocks of Meitu and Pantronics Holdings surged. The state still remains averse to digital currencies.