China has a long-running habit of banning crypto on one hand while quietly building blockchain infrastructure on the other. The latest example of that split arrived Monday in the form of a joint policy directive from two of the country’s most influential regulatory bodies.
China’s State Administration of Taxation and National Financial Regulatory Administration issued a joint policy notice Monday urging banks and local authorities to adopt blockchain and privacy computing technologies to upgrade what they call the “bank-tax interaction” model, with the stated goal of expanding financing access for small businesses.
The notice asks banks to standardize data sharing between tax authorities, lenders and enterprises, reducing the information gap that has long made it hard for smaller companies to secure credit from formal financial institutions.
On its face, this is a fairly technical directive about financial plumbing. But it fits into a much larger picture of how China is methodically positioning blockchain as infrastructure.
Solving a real problem for small business
The core challenge the directive is trying to address isn’t something new. Small businesses in China have long had difficulty getting loans from banks, with less than seven percent of new loans issued by domestic banks in recent quarters going to micro and small enterprises despite these companies accounting for over 90 percent of total business entities.
State-owned banks have historically preferred lending to larger state-owned enterprises, the collateral is cleaner, the relationships are easier, leaving smaller, privately-owned firms to piece together financing from more expensive private channels.
Academic research on China’s earlier Bank-Tax Interaction initiative found a marked decline in corporate debt default risk when tax and financial data systems were more tightly coordinated, with improvements most pronounced among firms with strong tax credit ratings and in regions with historically weaker legal environments.
The implication is that better data sharing between tax authorities and banks actively lowers borrowing risk across the board, which creates conditions for more credit to flow to deserving businesses that currently can’t prove their creditworthiness through traditional means.
That’s the core argument for blockchain here. Immutable, verifiable tax records shared across institutions, without exposing sensitive raw data, could allow banks to make faster, more confident lending decisions for businesses that have a clean compliance history but lack traditional collateral.
The policy notice explicitly frames this as rewarding “honest, tax-paying enterprises,” which is a signal that good fiscal behavior is meant to translate directly into better credit access.
The directive also calls on banks to improve credit models, enhance credit approval efficiency and increase the supply of financing services to compliant businesses.
Privacy computing, which allows data to be analyzed without being fully exposed, is specifically mentioned alongside blockchain, suggesting the government is aware of the sensitivity involved in sharing financial information between competing institutions.
A piece of a much bigger national strategy
Monday’s directive doesn’t exist in isolation. It aligns with a National Development and Reform Commission roadmap released in January 2025 targeting nationwide blockchain-based data infrastructure implementation by 2029. That plan is considerably more ambitious in scope.
Shen Zhulin, deputy director of the National Data Administration, said in a January 2025 press briefing that projects surrounding the development of such data infrastructure are expected to attract about 400 billion yuan, roughly $54.5 billion in direct investment annually, driving a total of about 2 trillion yuan over the next five years.
The bank-tax lending model is, in that context, one vertical in a much broader national effort to wire blockchain into China’s data governance architecture.
The implementation strategy spans three phases, from 2024 to 2026, establishing pilot programs across key sectors and developing standardized protocols; 2027 to 2028, building infrastructure capable of supporting large-scale data circulation; and the final phase completing national implementation by 2029.
China’s approach here is notably different from decentralized blockchain projects. This is state-coordinated, permissioned, and designed for compliance and sovereignty, not open access. That distinction matters.
China is embracing blockchain because of the control that permissioned network infrastructure allows. The regulators’ general approach is to ban any attempt to connect the technology directly or indirectly with cryptocurrencies, while actively welcoming its application in industrial and commercial areas. The bank-tax directive is perfectly consistent with that worldview.
Beijing’s track record on the technology side of this goes back further than many realize. In October 2019, President Xi Jinping publicly described blockchain as an important breakthrough for independent innovation of core technologies, accelerating its development and integration into the real economy.
By April 2021, the Shenzhen Tax Bureau had already expanded China’s first blockchain electronic invoice system. Monday’s directive is the latest extension of a policy arc that has been building for years.
Despite the 2021 nationwide ban on crypto transactions and mining, China is still the third-largest Bitcoin mining country, accounting for 11.7 percent of global hashrate as of January 2026.
That’s one more element of the contradiction that defines China’s relationship with the technology, deeply hostile to decentralized finance as a concept, but clearly unable or unwilling to fully disengage from the underlying ecosystem.