Recently, James Henry Lau, Secretary for Financial Services and Treasury in Hong Kong made statements regarding a trade financing system powered by blockchain technology.
According to Lau, who spoke at a forum on November 10, 2017, a blockchain-based system could yield "great benefits." One of the manners in which such technology might be applied would be to strengthen trade in China's Belt and Road initiative, where trade generally takes place between small and medium sized firms. According to Lau, a blockchain based system would eliminate the need for centralized organization and middlemen.
As per the report, Lau provided details on exactly how a blockchain powered trade system would benefit Belt and Road trading partners:
"This technology could cut the huge input of human resources and time that trade financing traditionally requires, reduce chances of fraud and lower companies’ investment costs through more efficient settlements."
President Xi Jinping launched the Belt and Road initiative in China in 2013, with the goals of engaging China with a greater degree of global trading partners. As reported, it now encompasses 69 countries, regions and organizations. Blockchain technology may provide a greater degree of infrastructure to this trade partnership.
Back in March, the Bank of China and Bank of East Asia collaborated together on a project designed to show how blockchain technology may be applied to the digitization of contracts, reducing the risk for duplicate transactions and fraud.
Also, in October 2017, the Hong Kong Monetary Authority (HKMA) and Monetary Authority of Singapore (MAS) had engaged in a test of their blockchain-based trade finance platforms as reported by ETHNews. By linking together their blockchain-powered systems, the MAS and HKMA bolstered anti-fraud measures.
As Chinese regulators in the region continue to analyze commerce and trade systems they may see more merit within new technologies. It still remains to be seen how central financial authorities will adopt blockchain-based platforms.