Nanjing, a city in eastern China, will spend $1.5bn on blockchain products to attract new startups to the region.
Officials made the investment announcement at the first Industrial Public Chain Summit, saying that a fund of ¥10 billion would be made available to businesses deploying blockchain in the energy, healthcare, and environmental industries.
Blockchain middleware firm UDAP, which is staffed by former IBM programmers, will be one of the first to get financial assistance, according to local media reports.
The money has come with the support of the Zhongguancun Blockchain Alliance (ZBA), which promotes blockchain in eastern China.
The ZBA’s general secretary, Zhu Peijiang, has been extremely outspoken on the promise of blockchain.
He said in a May speech: “The common feature of these industries with blockchain labels is that the heat quickly emerges, but it also quickly disappears. No one knows where the next hot spot centred on blockchain really is. The topic of the blockchain bubble is also beginning to spread.
Blockchain bubble brings cash
“The blockchain bubble must exist, but it is not a bad thing,” said Peijiang.
“We know that the bubble is a large influx of capital. From our technical point of view, it promotes technological innovation, [stimulating] developers or investors [and] researchers to enter the field. If it is extended to three years and five years, will it still be a bubble?”
Nanjing is the capital of Jiangsu, a province around 200 miles from Shanghai.
As the world’s largest inland port, it has made its money through heavy industries, including shipping and electronics manufacturing.
Nanjing has a population of more than 8.5 million people, larger than Hong Kong and an equivalent size to South African business capital Johannesburg, or Chicago in the US.
City leaders want to move away from the traditional industries which cause substantial pollution and myriad environmental issues and towards hi-tech.
The country’s President Xi Jinping has expressed positive feeling towards blockchain, even as China cracks down on cryptocurrencies.
He told the Chinese Academy of Sciences in May: “A new generation of technology represented by AI, quantum data, mobile communications, the Internet of Things and blockchain is accelerating breakthrough applications.”
China’s central bank, The People’s Bank of China, has expressed severe reservations about cryptocurrencies and earlier in 2018 its governor Zhou Xiaochuan imposed a blanket ban on ICO websites and cryptoexchanges.
The country does not recognise Bitcoin as a payment tool and local reports suggest that extremely tight regulations could be on the horizon.
China’s latest multi-billion dollar investment is yet another example of the ‘Blockchain good; Bitcoin bad’ effect which is being replicated across the globe, as fintech and new companies scramble to patent the technology that will underpin an entire industry.