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The Chinese are catching up to the Americans in the area of blockchain-related investments, according to a report from New York-based research firm CB Insights.

The researchers found that China accounted for 22% of blockchain investments in 2019, compared to 31% for the US. This represents a significant improvement for China when compared to 2015, when it had a meager 2% while the US was getting 51% of total funding, Cointelegraph reported.

Headlined by the trade dispute of 2019, competition between the US and China has intensified in recent years. That’s unsurprising considering they’re the two largest economies in the world. At best, however, the findings of this CB Insights report only suggest that US-China competition is intensifying in the blockchain space as well. It doesn’t give a clear picture of which country is ahead in blockchain development.

In addition, given that there is a slew of conflicting blockchain investment reports out there, it’s difficult to say for sure just what proportion of global blockchain investment goes to either country. For instance, according to CB Insights, 2019 saw a global investment volume of about $2.8 billion, down from $4.2 billion in 2018.

Earlier in this year, Xinhua – China’s state-run financial media firm – and financial data platform Rhino Data reported that Chinese investment deals came in at around $3.44 billion (24.4 billion Chinese yuan) across 245 deals in 2019. This represents a 40.8% drop in investment volume when compared to 2018, the report stated.

Experts say that the majority of the investment in China originates locally for now, but they expect more foreign funds in the near future. Kevin Shao of Bitrise Capital Partners said, “Currently, the main investors are mainly domestic venture capital institutions and individual investors as early stage investors. However, we believe that with the increasing internationalization of blockchain technology, the percentage of foreign investment institutions will increase over time.”

There aren’t any readily available reports focused solely on how much blockchain investment happened in the US last year, but again, the figures from CB Insights mostly show that the blockchain scene in China is picking up. Instead of looking at the figures, it might be worth considering the actual events, including the government’s stance, talent distribution and enterprise involvement, to obtain a feel for how blockchain competition is shaping up between the two countries. 

Governmental stance

In October 2019, Chinese President Xi Jinping publicly supported blockchain technology by urging the country to “take blockchain as an important breakthrough independent innovation of core technologies” and to accelerate its development. According to blockchain accelerator Consensys, China has over 500 registered blockchain projects, with most of them led by the government.

As part of its support for blockchain, the People’s Bank of China – the country’s central bank – is working to launch a digital yuan, which will be powered by a centralized blockchain. According to reports, the central bank has completed the essential development of the digital currency and is now in the process of drawing up legislation for its circulation.

The Chinese government’s stance, led by President Xi’s speech, has had two effects on the blockchain development scene in the country. First, it has outlined the future path of the industry. Second, it has made mainstream the status of blockchain and promoted its orderly development, thereby opening more opportunities for new players to enter. Qi Qi, the CEO the of blockchain incubator B-Labs, said, “On the capital side, domestic traditional funds are more willing to get involved, especially paying attention to the field of industrial blockchain, which is a big breakthrough for traditional funds and the blockchain industry itself.”

Simon Li, a founding partner at Chain Capital, told Cointelegraph that “the Chinese government is actively embracing the blockchain and will use it in the government affairs system to create many application scenarios.”

The US government has a somewhat more cautious approach to blockchain. While a few government agencies – mostly military – are exploring the use of blockchain in the country, it’s still hard to say the government is particularly pro-blockchain, and this might limit the flow of blockchain investment in the country. Speaking to Cointelegraph, Sukhi Jutla, the co-founder of MarketOrders — a blockchain platform for the jewelry industry — said: “Although the US is still a key leader when it comes to blockchain investments, it cannot compete with China. The US is hindered by regulations that are slow and don’t keep pace with the innovations of technology. China is able to move with speed as their governments allow them the space to do what they need to do.”