China’s State Administration of Foreign Exchange is running a blockchain pilot to address cross-border trade finance challenges for SMEs. Today China Financial News reported that the pilot started with the regional Bank of Jiangsu with the aim of increasing financial support but also reducing risks.
The blockchain addresses the lifecycle for an export receivable financing transaction starting with the SME applying for financing. It tracks acceptance, verification of customs declarations, review, registration and lending. The result was a reduction in time and improved convenience for the SME.
This is one of several Chinese trade finance initiatives.
One of the earlier projects was from Zheshang Bank which launched its Zheshang Chain in August 2017. By the end of June, it had processed 2,600 receivables worth more than $3.9 billion and issued a securitized loan note of $68 million.
On December 29th the China Banking Association (CBA) launched a blockchain platform initially for domestic Letters of Credit and Forfaiting. Perhaps the largest of all the projects, by then ten of China’s biggest banks had already trialed the platform with many others involved.
A consortium of banks led by China’s central bank is involved in the Bay Area Trade Finance Blockchain Platform which targets trade with Hong Kong and Macau.
In late October 2018, the Hong Kong Monetary Authority launched the eTradeConnect platform developed by Ping An’s OneConnect.
OneConnect also developed a “One Enterprise Chain” supply chain finance platform for small to medium-sized banks.