The Shanghai free trade zone. Photo: Xinhua

Local Shanghai government departments and financial companies have jointly established a blockchain alliance in Shanghai's E-port area to push the application of blockchain technologies to the city's international trade.

An E-port area blockchain alliance written proposal was signed by the Shanghai Municipal Commission of Commerce, Shanghai Customs and representatives from six bank branches in Shanghai, including the People's Bank of China and the Bank of Communications, on Thursday during the second China International Import Expo (CIIE). 

Decentralization and distributed accounting features mean that blockchain is a technology that promotes information sharing, thereby improving the coordination of relevant parties in international trade, Chen Huifang, a professor at the College of Information Science and Electronic Engineering of Zhejiang University, told the Gloabl Times on Thursday.

"Blockchain technology increases the reliability of information, thus improving the efficiency of customs clearance, reducing costs and promoting trade facilitation," said Chen.

Blockchain technology has been applied in several free trade zones (FTZs) in China, aiming to improve administrative efficiency, enhance trade convenience and increase mutual trust among parties through blockchain-based transactions.

Ye Jian, an official from the General Administration of Customs of Shanghai, said that the application of blockchain technology can be seen as another move under China's vow to optimize its business environment.

"This is the first blockchain application project in customs and the first service project for the CIIE. China upholds multilateral trade and constantly improves its business environment by seeking technological innovation," said Ye.

China said at the CIIE that it will uphold the multilateral trading system and promote the construction of an open world economy. In the current world economic landscape, unilateralism and protectionism are on the rise, and economic globalization is encountering setbacks. The authority and effectiveness of the multilateral trading system are being challenged. 

The cutting-edge blockchain technology has already been applied to a number of business areas involved in Shanghai's international trade. These areas include digital insurance, the digital supply chain, the Internet of Things and intelligent manufacturing, said Shen Weihua, deputy director of the Shanghai Municipal Commission of Commerce. 

According to Shen, Shanghai utilized blockchain technologies for the newly launched cross-border yuan trade financing services for the city's single window system. This application has helped solve information imbalance issues during the process of trade financing. 

Shanghai is only one example of blockchain application for finance in China. At the end of October, a cross-border financial blockchain service platform was piloted in Nanning, South China's Guangxi Zhuang Autonomous Region.

Chinese President Xi Jinping recently stressed that the application of blockchain technology plays an important role in China's technological innovation and industrial change. He also said that China should view blockchain as an important breakthrough in core technological innovation. 

Qi Hong, vice director of China Construction Bank's Shanghai branch, told the Global Times that the application of blockchain in finance is still in its trail phase in China.

"We now use blockchain in sporadic financial products instead of the whole finance industry chain, and the public don't have a sound understanding of the technology when it comes to financing. But I think the government's call for blockchain construction will help push the technology's application in a more comprehensive way." 

She also said that the China Construction Bank will continue to use blockchain to enhance its management and reduce costs.