Perhaps it’s due to the well-oiled publicity machines of the jurisdictions around it, but China’s blockchain developments in trade finance have flown slightly under the radar.

Hong Kong and Singapore have stolen many of the headlines and column inches, with their respective national trade systems.

Singapore launched its Networked Trade Platform (NTP) to much fanfare on September 26 and while this is not blockchain-based, it is designed to plug into the Global Trade Connectivity Network (GTCN), a distributed ledger technology (DLT)-based platform being built in conjunction with the Hong Kong Monetary Authority (HKMA), set to be launched early in 2019.

Meanwhile, the HKMA is due to go live with its E-Trade Connect solution on October 31. This blockchain-based platform is being developed by OneConnect, the tech arm of Chinese insurance giant Ping An, and involves ANZ, Bank of China, Bank of East Asia, DBS, Hang Seng Bank, HSBC and Standard Chartered.

It aims to bring open account trade finance processes onto DLT. For those who still trade using letters of credit, it will give the option of using open account by providing a trusted platform, where counterparties are fully vetted. The platform was due to go live in September, but after a soft launch, test live transactions are currently being conducted and will be announced imminently, GTR understands.

In China, meanwhile, there is plenty of activity on blockchain, despite the government’s crackdown on cryptocurrencies operating outside its sphere of influence.

In September, the People’s Bank of China (PBOC, China’s central bank) brought a blockchain-based trade finance platform into the test phase.

The Bay Area Trade Finance Platform is designed to allow small businesses in Guangdong better access to trade finance. The ability to share data via DLT is what led the PBOC to use DLT, as well as its uses as a fraud prevention tool. Banks involved in the platform will share data on potential clients, with a view to offering asset-backed loans.

The PBOC started discussions in Shenzhen in May with four local banks: Bank of China, China Construction Bank, China Merchants Bank and Ping An Bank. It invited Standard Chartered to be the only foreign bank involved, ostensibly due to its presence in China’s domestic market, but also due to its work with the monetary authorities in both Hong Kong and Singapore in their respective cross-border trade finance systems.

The solution’s development ties in with the push to grow the Greater Bay Area in Guangdong, one of China’s major economic engines and a key tech hub. The Chinese government is planning to develop the 11 cities in the region, including Hong Kong, Shenzhen, Macau and Guangzhou, into a “world-class city cluster”.

It is a significant trade hub – if it were a country, it would be the world’s fourth-largest exporter, ahead of Japan – and so it was perhaps natural that this would be the location of the country’s first state-backed blockchain platform for cross-border trade finance.

“The discussions we had in May with the PBOC in Shenzhen were primarily to brainstorm, what can we develop to help the local market? This was a broader discussion around the overall development of the Greater Bay Area, which is also building steam. We said that one factor is to have a platform that facilitates clients, but ultimately what is the direction of the platform in facilitating domestic and international trade?” says Biswajyoti Upadhyay, regional head of transaction banking product management for Greater China and North East Asia at Standard Chartered.

The proof of concept was completed in September, with plans now to move the solution to full commercial production phase, although no timeline has been set. Key to the PBOC’s thinking is the need for it to be interoperable with other consortia and platforms in the industry, commercial or private sector.

The pace of change is fast, and you have to keep pace with that. I am very impressed with the way the development process has happened, engagement with banks, sharing ideas and then putting it into something viable. You develop, pivot, learn, fail and move forward. Because we were involved with HKMA and NTP, we could share our learnings and pitfalls to avoid. That helped bring closure and the timeline to bring to proof of concept stage much faster,” Upadhyay says, referring to the speed with which China’s platform passed into the pilot phase, compared with other jurisdictions.

There have also been successful projects in the private sector although, unsurprisingly, few have been given much publicity.

Citic Bank has been operating a blockchain-based domestic letter of credit system since 2017, which it developed in conjunction with Hyperledger. In a recent earnings call, the bank’s vice-president Fang Heying said that more than Rmb1bn (about US$145mn) had been transacted on the platform to date.

In May, Bank of Shanghai and China Construction Bank launched China’s first blockchain-based letter of credit, in conjunction with tech company Jiangsu HopeRun Software.

Anecdotally, there are other private projects in the works, but little else has been reported. In an interview with GTR in February, Hyperledger’s executive director, Brian Behlendorf, said that he’d visited a bank in China which does “thousands of transactions, hundreds of millions of dollars are day, and they call that a pilot”.

He added: “What’s frustrating is that very few of these companies want to give the sort of detail that would substantiate them, it’s not like running a public website or tracking the floating price of your coin on Coinbase, so we’re working on that.”

Paul Sin is the fintech consulting partner at Deloitte in Hong Kong. He says that other than the PBOC project in Guangdong, he’s seen “not many things happening” in the space in China.

“It’s a bit challenging to drive blockchain for trade finance use in China,” he tells GTR. “The regulations aren’t really settled. The trade ecosystem in China, is still heavily paper-based and labour-intensive. In order to use blockchain, you need to digitise. This is a prerequisite and it isn’t done yet. For most banks in China, documents are still handwritten on paper, sent using fax machines. They can’t even enter it into the banking system let alone blockchain.”

In areas other than trade finance, we’ve seen AliPay and Ant Financial launch remittances services powered by blockchain, tech that could feasibly be used to transfer cross-border trade settlements. In the same space, Bank of China is working with Union Pay, the Chinese card company, to launch a cross-border mobile payments solution on blockchain.

IBM has worked with Chinese and US retail giants and Walmart to launch Blockchain Food Safety Alliance, aimed at improving food traceability and safety in China. Elsewhere in the world, this has been a common first-use of blockchain in the supply chain, with financial services such as lending following in due course.

Undoubtedly, there is more happening than meets the eye – in China, experts say, they prefer to have a finished product before they start hyping it up. But like many other parts of the world, China is still finding its way with blockchain technology in the trade space.