Blockchain Technology Is the Key to Solving Supply Chain Finance Challenges: Chinese Official

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A senior regulatory official has highlighted the importance of applying blockchain technology to ongoing efforts to improve China’s supply chain finance systems.

“At present, supply chain financing suffers from problems and pain points in relation to the veracity of background trades, the veracity of contracts and the smoothness of delivery,” said Chen Weigang (陈伟钢), former deputy head of the China Banking and Insurance Regulatory Commission’s (CBIRC) party school, at the “2021 Digital Supply Chain Financing Forum” (2021数字供应链金融创新论坛).

“[These problems] require the application of blockchain technology for resolution.”

Chen highlighted the ability of blockchain technology to solve trust issues in relation to supply chain financing.

“The most important role of the blockchain when it comes to supply chain financing isliesin the establishment of better trust mechanisms,” said Chen. “Traditional supply chain financing is banks helping enterprises to transform rocks into gold, while the blockchain transforms paper into gold.”

Chen stressed the importance that Chinese regulators place on the economic role of supply chain financing.

“Pushing supply chain finance to service the real economy has always been an area of policy guidance for regulatory authorities,” said Chen, highlighting in particular the issuance of the “Guidance Opinions on Driving Supply Chain Financing to Service the Real Economy” (关于推动供应链金融服务实体经济的指导意见) issued by CBIRC in July 2019.

Chen also highlighted efforts to apply blockchain technology to multiple parts of Chinese society and the economy.

“Mature blockchain technology is not only the fundamental path for resolving the pain points and problems of supply chain financing, it’s also a major path for raising national governance capability,” he said.

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