China is using blockchain to increase the efficiency of cross-border trade
On December 3, China applied blockchain technology to the entire process of international intermodal for the first time, transporting goods from Chengdu, Sichuan to Vientiane, the capital of Laos. Intermodal refers to using two or more modes of transportation for the movement of a single shipment.
International trade is greatly aided by the use of tissue paper for things like shipping, customs, insurance and other facets of global trade. However, because they have to go through so many different organisations, such as clients, trains, banks and customs, there is a chance they will be misplaced or lost. To make matters worse, using paper forms reduces the flow of information.
That is why Chengdu wants to use blockchain technology to build a guaranteed and reliable channel for information flow.
Blockchain enables total data visibility and a single source of truth by enabling all parties participating in international trade to record changes in a single shared ledger. Businesses can also access the status and location of goods at any time because transactions are constantly time-stamped and updated.
“Blockchain technology can solve the mistrust problems, thanks to its decentralization, non-tampering and traceability functions,” said the digital economy unit of China Railway Chengdu Branch, adding that the information from all parties, including importers, exporters, freight forwarders. agents, customs, etc., is open and transparent in the chain.
The chain’s data can also be used by companies to build faster routes and eliminate pointless delivery stages, thereby increasing the efficiency of the overall transportation process.
In terms of the application of blockchain technology in global trade, the Chengdu branch is a pioneer. In August 2019, it unveiled a blockchain-based platform that enables the uploading of all waybill information related to China-Europe Express. The route, which officially opened in 2018, currently serves as an important export channel for Chinese goods to Europe.
Aided in part by blockchain-enabling initiatives, freight trains between China and Europe have picked up speed in recent years. Statistics showed that it took three years and three months for the freight trains to run 200 trips, but only two months to increase from 800 to 1,000 trips.
As more data is recorded on the platform, it can also be used by foreign trading companies to get more credit. In April, Chengdu, with the help of the Industrial and Commercial Bank of China (ICBC), launched the China-Europe Trade Link 2.0, a new version of the blockchain-powered platform.
Instead of focusing on the assets of the business, banks can track their business flow, capital flows and logistics to decide whether or not to grant a loan. It helps foreign trade companies get financing directly from banks, reducing costs and increasing their cash flows.
China Merchants Group, a state-owned conglomerate that runs trade, transportation, finance and real estate businesses, is also using blockchain technology to manage its ports, to increase the efficiency of cross-border trade.
Using the blockchain technology provided by Tencent Cloud, it has developed a logistics alliance chain that promotes open and timely data exchange between all participants. Because of this, the group said efficiency in cross-border trade logistics has increased by 60% while costs have decreased by 50%.
“The advanced stage of the supply chain is to enable business and capital flows to be operated in a credible and efficient manner, and blockchain will be the ultimate solution,” Zhang Jian, digital chief of China Merchants Group, told the press in September in year.
Since the outbreak of the COVID-19 pandemic, cross-border trade has been hit hard by widespread procurement disruptions. While disruptions in the global supply chain are inevitable, the wider use of blockchain technology could make it easier to deal with these issues.
Photo by CHUTTER SNAP on Unsplash
