China’s Blockchain Strategy: A New Digital Order
The United States and China have divergent approaches to blockchain technology. While the U.S. focuses on cryptocurrency regulation, China is making significant investments in blockchain infrastructure, positioning it as a central component of its national digital strategy. This divergence has sparked concerns in Washington, with Representative Raja Krishnamoorthi warning that China’s dominance in blockchain infrastructure could grant the Chinese Communist Party “unprecedented influence globally.”
At its core, blockchain is a distributed ledger technology that enables secure, time-stamped digital record-keeping shared among multiple parties. Its applications extend beyond cryptocurrency to various industries where multiple actors must coordinate across fragmented systems. For instance, blockchain can streamline the journey of a smartphone component from Taiwan to the United States by providing a trusted digital record visible to all authorized parties, reducing transaction times from weeks to hours and cutting operational costs by up to 80%.
China’s National Blockchain Strategy
In 2019, President Xi Jinping urged China to “seize the opportunities” presented by blockchain technology, framing it as crucial for the “next round of technological innovation and industrial transformation.” China has since mobilized its resources, embedding blockchain in both the 13th and 14th Five-Year Plans and unveiling a $54.5 billion national blockchain roadmap. This strategy involves coordinated action among central bodies, state-owned giants, and tech titans like Alibaba, Tencent, and Huawei.
The Blockchain Service Network (BSN)
Central to China’s global blockchain ambitions is the state-backed Blockchain-based Service Network (BSN), launched in 2020. The BSN provides a standardized, low-cost platform for deploying blockchain applications globally, effectively serving as a ‘digital Belt and Road.’ By early 2025, BSN nodes had been established in over 20 countries, providing the foundation for blockchain-based smart cities, trade ecosystems, and digital identity systems.
The BSN embodies China’s divergent approach from Western permissionless ideals, exporting “blockchain with Chinese characteristics” – a permissioned system with known validators and state-aligned governance. This approach includes features like mandatory real-identity registration and technical powers for transaction rollback or shutdown, fundamentally contradicting Western blockchain values like immutability and censorship-resistance.
Strategic Implications
The global expansion of the BSN is laying the groundwork for a blockchain ecosystem aligned with Chinese technical norms, offering a full-stack alternative complete with infrastructure, development tools, and pre-defined rules. This expansion has significant strategic implications, including potential data access and operational insight for China, dependency risks for countries integrating the BSN, and the potential export of Chinese digital governance models.
Blockchain and China’s Financial Ambitions
China’s blockchain strategy also intertwines with its ambitions to reshape global finance. Initiatives like Project mBridge, a blockchain-based platform for settling transactions using central bank digital currencies (CBDCs), aim to circumvent traditional correspondent banking and SWIFT. The BSN network also provides pathways for embedding the e-CNY (China’s digital yuan) into daily economic life, potentially creating alternative financial infrastructure independent of Western oversight.
For the United States and its allies to compete effectively in this emerging landscape, recognizing the scope and ambition of China’s blockchain strategy is crucial. Developing a coherent counterstrategy is the urgent next step to counter China’s growing influence in global digital infrastructure.
