China unveils Web3 ambition, signalling the end of 'crypto winter'

Recognising the economic potential of blockchain technology and digital assets, China is softening its stance in what looks like a modified outlook on digital asset investing and trading in the country.

Following an interesting chain of developments, Beijing has unveiled a white paper to foster innovation and advance development within the web3 industry, according to local news outlet The Paper. This comes on the heels of China officially endorsing the China Digital Asset Exchange earlier this year, which many thought opens the gates for second-hand NFT trading.

The “Web3 Innovation and Development White Paper” released at the Zhongguancun Forum by the Beijing Municipal Science and Technology Commission, recognises the potential of web3 tech as an “inevitable trend for future Internet industry development” and is paired with a planned US$14 million annual investment to strength its position in web3, as well as a rollout of a state-backed metaverse platform.

“The white paper proposes that the current development of the Internet 3.0 industry in Beijing still faces challenges in terms of technical and talent support capabilities, industrial chain integrity, and legal norms based on the analysis and judgment of the status and trends of the Internet 3.0 development,” the report reads.

Interestingly, Beijing acknowledges the work done by Apple, Meta and Google for their compelling advancement in the tech space whilst highlighting the potential of domestic players such as Bytedance, Baidu and Tencent in manoeuvring the conversation further.

The developments come as Hong Kong securities regulators have set new rules to allow retail cryptocurrency trading after June 1. 

Key highlights

• Web3 is the “inevitable trend” in the future development of the internet. China categorises it as three-dimensional space, with highly immersive, interactive experiences, integrating real and virtual worlds.
• The Beijing Municipal Party Committee and Beijing Municipal Government confirm their support for all aspects of the web 3 industry development. They stress on the importance of Beijing being a focal point of as international science and technology innovation.
• Local reports suggest that Beijing’s Chaoyang District is investing an initial RMB 100 million (US$14 million) annually in special funds to support the industry development.

The report lays out a four-layered framework:

• Infrastructure layer: This concerns AI, blockchain, computing chips, communication network technology.
• Interactive terminal layer: The interactive terminal layer encompasses extended reality terminals, holographic images, and brain interface technologies that facilitate immersive sensory experiences.
• Platform tool layer: This supports the tech for the creation of virtual spaces through digital content production and digital twin technologies.
• Application layer: This enables services for consumer entertainment, industrial manufacturing, government services, urban city management etc.

Despite these bold initiatives, the white paper acknowledges the turmoil and scandals in the global crypto industry and the realistic challenges that lie ahead, which include technical and talent support, the integrity of the industrial chain, and legal norms.