Blockchain, NFTs, and Web3 Included in Shanghai’s 5-Year Plan  


Despite the crackdown on the use of all forms of digital currencies, China remains open to the possibilities of non-fungible tokens (NFTs), Web3, the Metaverse, and blockchain technology.

On Tuesday, July 19, the director of the Municipal Administration of Culture and Tourism, Fang Shizhong said that authorities in the second-most populous city in China, Shanghai have liaised with big technology companies to study how tourism could be improved using the Metaverse. This comes within a week after the Municipal Government of Shanghai published a draft labeled, 14th Five-Year Plan for the Development of Shanghai’s Digital Economy” on Wednesday, July 13.

Per the document, the city wants to promote the deep integration of the real economy and digital technology. With this, entrepreneurs will discover market demand, and scientists will be better placed to judge technology prospects.

In the plan, the city will grant support to firms, enterprises, and companies that will be contributing to the construction of the trading platforms that will be holding non-fungible tokens (largely referred to in China as digital collectibles).

Aside from this, authorities will provide support for the research and promotion of the digitization of digital collectibles and other assets in the crypto finance industry.

In the section dedicated to blockchain technology, the state will remain committed to the development of blockchains. Aside from that, authorities will promote how these technologies could be applied in various industries.

Although many people have heard about blockchain technology, it has become a term linked to the cryptocurrency industry but transcends the space. According to International Business Machine Corporation (IBM), blockchain enhances security, ensures greater transparency, and provides instant traceability, increased efficiency, and speed as well as automation. Blockchain can benefit the supply/food chain, financial/banking, healthcare, pharmaceutical, governmental, and insurance industries.

As a result, all aspects of the Shanghai economy would benefit invaluably from the promotion of the application of blockchain technology.

The GDP growth rate of Shanghai decreased by 13.7% from April to June when compared to the same period last year. Most of this was down to the lockdown measures put in place due to the soaring COVID-19 cases from mid-March to early July. Blockchain could speed up the productivity of many sectors of the city’s economy.  

In addition to blockchain, the municipal government has made plans to expedite the research and deployment of the platform for the interaction between the real society and the virtual world in the Metaverse.

Through this, the city’s administration hopes to see the creation of new platforms that have unique content that can draw more people into the tourism industry of Shanghai. Provisions would be made for the creation of new forms of digital entertainment consumption such as sports, idols, and virtual concerts.

According to director Fang, the city’s administration will be holding a digital art-themed event dubbed the Shanghai International Artwork Trade Week in November 2021. This is in an effort geared towards the promotion of digital collectibles related to culture and art.

China wants to be at the forefront of Web3 and so does its second-most populous city. As a result, provisions will be made for the exploration of distributed data storage, multi-platform OpenID, internet protocol version 6 (IPv6), quantum communication, and sixth-generation wireless network technology (Wi-Fi6).

Additionally, funds will be allotted to the research of a decentralized domain name resolution system (DNS) and end-to-end encrypted communication technology, This will be completed by an updated hardware base and deployment of 6G.

Due to the threat of decentralized finance (DeFi) due to the above-average returns it promises, China has not opened up to the use of decentralized applications (dApps). As a result, it comes as little surprise to see the paper’s silence on the matter.

With that said, the document made mention of “digital finance”. It promises the advancement of smart contracts and improvement in the slippages involved in the trading of assets. Moreover, the plan will enhance registration, payment, settlement, and custody services.

Due to the threat digital currencies pose to the Chinese economy due to the dollarization of tokens, this paper will further explore the expansion of the digital Yuan (the national digital currency of China).

The five-year development paper also highlighted areas not related to the crypto finance space which include, but are not limited to, intelligent service robots, digital health, low-carbon energy, and smart cities.

Overall, Shanghai will be setting up a $1.4 billion fund to invest in the Metaverse. By the start of 2025, the city expects its metaverse industry to have grown to $52 billion.  

As of Wednesday, July 20, the all-time global NFT sales stood at $38.37 billion, per data from CryptoSlam. The Metaverse market is said to be worth around $13 trillion, according to Citibank.



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