China’s Coronavirus Outbreak Prompts Blockchain Adoption for Charity

Tens of millions of dollars have been reportedly raised to help Wuhan, a city in central China with 11 million people, to recover from its coronavirus outbreak earlier this year. However, charities in China are not widely trusted. 

Now, China’s digital payment and banking giants have been building blockchain-based platforms to tackle miscommunication between charities and the affected communities, as well as a lack of transparency in the current donation distribution system, CoinDesk Japan reported Monday. 

Alibaba, parent of AliPay, released the technical framework and industry standards for blockchain platforms for charities in September. It plans to increase transparency by tracking donations on the company’s enterprise blockchain and make it easier for people to make donations via its authentication function. 

Tencent also made an effort to record donations to a nationwide charity campaign on its enterprise blockchain TUSI. The annual campaign, held on Sept. 9 every year, raised over $3 billion from more than 43 million individuals and 14,000 companies in 2019, CoinDesk Japan reported. 

The Industrial and Commercial Bank of China (ICBC), one of the major four state-owned commercial banks in China, included blockchain use cases for charities in a 2020 white paper on the technology’s adoption in the financial services industry. 

“During recovery from the coronavirus outbreak, ICBC has launched and promoted blockchain platforms to track donations,” the bank said in the white paper. “The Red Cross Guangxi branch and Zhuhai Charity Headquarter are currently on our platform and we will gradually invite more organizations across the country.” 

Trust crisis

These moves echo the State Council’s call to use emerging technologies, including blockchain, to improve the charity system in China and restore the general public’s trust in Chinese charities. 

China’s Red Cross, one of the largest charities in the country, was criticized for not getting supplies to hospitals that were fighting the coronavirus in February. A state media outlet livestreamed a suited man loading a box of face masks into a truck with the characters on it saying “Vehicles for Government Officials” next to a Red Cross warehouse. 

Another scandal caused more long-lasting damage to the Red Cross’ reputation. A woman named Guo Meimei claimed she worked for the Red Cross and angered Chinese netizens by showing off her lavish lifestyle on social media in 2011. Unsubstantiated rumors said she had connections with a high-ranking Chinese official in the Red Cross and misused some funds in the charity. The organization had received tens of millions of dollars in donations on the heels of the 2008 Wenchuan earthquake. 

In its proposed policy in 2016, the Chinese Red Cross Foundation said it would set up an independent third-party institution to audit and supervise the management of its supplies and donations, according to a document on the State Council’s official website.