The People's Bank of China (PBoC) is reportedly set to receive 32.35 million yuan (around AUD$7.2 million) in "special funding" from the government over a three-year period for the purposes of research and development into the trade initiative.
Known officially as the Bay Area Trade Finance Blockchain Platform, banks and businesses store order, logistics and transaction data onto the system, with the intended purpose of creating new transaction efficiencies. It also provides regulators with greater oversight and grants access for smaller and medium-sized enterprises (SMEs) to more sophisticated financing tools.
This platform is led by the PBoC's Digital Currency Research Lab, and is available to businesses based in Shenzhen, a mainland city neighboring Hong Kong. Major commercial banks, including Bank of China, Ping An and Standard Chartered, were invited to trial the platform when it entered the public testing phase in September 2018.
In January of this year, the platform was used by a network of 38 banks with total combined volumes exceeding 90 billion yuan ($13 billion). The new funding from Beijing is now expected to help PBoC drive adoption for its trade finance platform even further among a greater scope of industries.
A report from McKinsey & Co said:
[Blockchain] ecosystems are a game-changer in supply-chain finance, because of the much larger range of services, business models, and technologies available, compared with traditional platforms. The scale and diversity create significant opportunities for lenders, borrowers, and providers of adjacent services.
As well as lower interest rates, analysts estimated that this platform could cut loan approval times to as little as 20 minutes.
Chinese President Xi Jinping said last autumn that the country had to "seize the opportunity" when it came to blockchain technology, including increasing government investment and development in core technology areas. This is definitely a significant follow through of that statement, and one that the rest of the world should be keeping a close eye on.