China’s Fuzhou City Offers Cash Subsidies To Attract Blockchain Companies

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Fuzhou City, located along China’s southeastern coast, recently unveiled a series of incentives to attract blockchain-related companies and foster the growth of its digital economy. The local government aims to position Fuzhou as a leading blockchain technology and innovation hub.

On Friday, the City unveiled policies, including rent subsidies on office space and cash awards for hitting revenue targets. Fuzhou hopes to bring more high-tech jobs to the City, which sits on the coast about halfway between Shanghai and Hong Kong.

According to a report by the Fuzhou Municipal Bureau of Finance and the local Chinese Communist Party’s committee on big data, the Fuzhou government will offer subsidies of up to 500,000 yuan (US$71,811) to approved blockchain projects.

Additionally, blockchain companies and institutions renting office space in designated industrial complexes can benefit from annual rental subsidies of up to 600,000 yuan for every 1,000 square meters of space.

Further, local government will offer monetary rewards to local blockchain companies and institutions that receive government certifications, reach certain revenue targets, or provide training services in blockchain technology. For example, a company in Fuzhou that is certified by the state as a national-level laboratory for blockchain technologies can be awarded as much as 1 million yuan (US$143,622) by the local government, according to the report

However, the Fuzhou government’s commitment to blockchain technology extends beyond attracting external investment. In a recent Digital China Summit & Exhibition, local authorities demonstrated the use of blockchain for storing government data, showcasing their dedication to implementing the technology within the City’s administrative processes.

China’s Promotion Of Blockchain Technology

China’s central government has been actively promoting blockchain technology by recognizing its potential for economic development. On the other hand, it has been prohibiting cryptocurrency trading and mining. As early as 2021, the State Council identified blockchain as one of the seven key sectors within China’s digital economy.

Nonetheless, the commitment is further emphasized with the recent opening of a national blockchain research centre in Beijing. The research Centre aims to train various blockchain professionals to support the country’s Web 3.0 initiatives.

With these forward-thinking policies and investments, Fuzhou City is poised to become a vibrant blockchain innovation centre, attracting domestic and international companies seeking to capitalize on the City’s favorable business environment and government support.

The Chinese government opened the National Blockchain Technology Innovation Center in Beijing. It intends to aid the advancement of blockchain technology by establishing this research center, which was first announced in February. However, the nation continues to forbid cryptocurrencies on a national level. The research center will work with regional institutions, think tanks, and blockchain companies, according to kitco.com.

China’s recent initiatives, according to kitco.com, are consistent with its goal of developing blockchain technologies with Chinese characteristics. Although the nation sees cryptocurrencies as a threat to its financial system, it thinks blockchain technology must be developed and integrated. In particular, there are over 1,400 blockchain-related businesses nationwide, and at least 29 cities and provinces have adopted blockchain as part of a five-year plan from 2021 to 2025.

The Digital Yuan

Regarding the creation of a digital currency issued by a central bank, China’s digital yuan pilot is currently active in 17 provinces, encompassing 26 major cities and more than 5 million merchants. The Bank of China and French bank BNP Paribas have teamed up to push the digital yuan to corporate clients starting in May 2023.

This partnership’s main objective is to make it possible for the corporate clients of BNP Paribas China to connect to the BOC system. Users can manage their digital yuan wallets by linking their digital yuan wallets to their bank accounts, keeping track of transactions, and making payments with China’s virtual currency via an e-CNY management system. The management system also intends to simplify the use of digital money for real-time customer transactions.

However, in 2019, the state-run People’s Daily reported on June 11 that Fuzhou City offered rent subsidies to blockchain businesses to increase the industry’s growth. The incentive part of three measures was designed to help the industry, Notably to enable companies to receive up to 600,000 yuan in relief on rent bills per year for three years.

Some of China’s biggest platforms, notably, started embracing blockchain. On May 21, 2019, it was reported that e-commerce giant JD.com has applied for more than 200 blockchain patents.

The Yuan Trial

China continues to push to adopt its digital yuan, with the latest move involving a trial in the City of Changshu, where the digital currency will be used for wage payments. The practice is set to run from May 5 to June 6 and will involve 50,000 people, including government workers and employees of state-owned enterprises. This move marks a significant step towards the broader adoption of the digital yuan, which has been developing for several years.

The digital yuan can be used to make purchases at designated City merchants and transferred to other digital yuan wallets.

The Changshu municipal government will run the trial with the People’s Bank of China (PBOC) and several other government agencies. The trial aims to evaluate the effectiveness of the digital yuan as a means of making wage payments and test the system’s overall performance and reliability.

The trial in Changshu represents a significant milestone in China’s efforts to promote the adoption of the digital yuan. Adopting the digital yuan could also have implications for the broader cryptocurrency market. China has been a critical player in the global cryptocurrency market, with a significant proportion of Bitcoin mining in the country.

The introduction of a state-backed digital currency could potentially undermine the use of other cryptocurrencies, particularly those that are decentralized and outside of government control. However, as Fuzhou continues to position itself as a leader in China’s digital economy, its efforts will likely yield significant economic growth and create numerous high-tech job opportunities in the coming years.