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People's Republic of China
5.08 Neutral Environment
China plays a special role in the crypto industry. According to various experts, it is here that from 75% up to 80% of global bitcoins were mined in 2015–2017 and from 50% to 70% in the summer of 2018. Chinese miners probably owned 40% of bitcoin mining equipment in 2014 and already 70% in 2016. China's special role in the crypto industry stems from both the relatively low cost of electricity in mountainous regions and the well-organized production and supply of electronic components. However, even initial period of the most active development was marked by contradictory regulatory measures taken by the government. The first restrictions on bitcoin were adopted in China in 2013. The People's Bank of China issued an official statement on December 5, 2013 warning of the dangers of speculation, money laundering, and other criminal activities in the cryptocurrency market.
On October 13, 2015, the Cyberspace Administration of China (CAC) recognized that the blockchain technology could contribute to the evolution of more stable electronic money. In November 2016, China's Ministry of Industry and Information Technology published the country's first official guiding document on the blockchain technology and its applications in the country.

In September 2017 ICOs were banned. An official state announcement was published on September 4; it was prepared by the so-called "seven bodies", including the People's Bank of China, the China Securities Regulatory Commission, the China Banking Regulatory Commission, the China Insurance Regulatory Commission, the Cyberspace Administration of China, the Ministry of Industry and Information Technology of China, and State Administration for Industry and Commerce. The next step was the actual ban on exchanging cryptocurrencies. There is no explicit ban at the legislative level, however, it is implicitly implemented by local municipal administrations. Several largest exchanges closed its operations. On January 2, 2018, the Office of the Special Rectification Work Leadership Team for Internet Financial Risks published a statement prescribing local authorities in Chinese provinces to urge Bitcoin miners to gradually exit their businesses. The document contains no direct ban, but proposes to tighten measures to control energy consumption, land use, tax payment, and environmental protection.

On the other hand, the interest of the Chinese government structures in blockchain technologies led China to their official recognition as a possible basis for the economy of China and the whole world in the future. The blockchain technology is being integrated into many areas of life in China (social insurance system, public transportation, payment system, taxation, etc.), and this happens in the context of close cooperation between the state and commercial sectors.
Neutral Political Environment
6.0 points
Significant decisions and the domestic policy held by China's state bodies usually remain the subject of closed discussions. Nevertheless, the public statements of all China's political actors operating in the field are on the same page: the blockchain technology means strengths and capabilities, while decentralized cryptocurrencies mean hazards and weaknesses. Contradictions arise when official policy is implemented as no legislation governing the crypto industry has yet been developed or published. On the one hand, China regulators support the prohibitive policy in the domestic cryptocurrency market. On the other hand, the Chinese government has been actively supporting blockchain initiatives, officially calling on local financial institutions and state research centers to focus on developing the blockchain technology and speed up the commercialization of blockchain.
Not Enabling Legal Environment
1.75 points
Regulatory Convergence
There is no comprehensive special legislation regulating legal relations related to blockchain and cryptocurrencies in China. The general policy in this area is determined by the People's Bank of China and the Ministry of Industry and Information Technology and then interpreted by local authorities as the case may be. The state decrees, which are published usually in the form of public recommendations, create ambiguity in the interpretation of laws. However, in 2018, the authorities started a targeted fight against divergence, as evidenced by the launch of specialized research institutes and standardization projects supported by the government and the People's Bank of China.

Definiteness of Legal Regulation
Legal regulation of cryptocurrency in the PRC can hardly be called definite, since no special legislation exists in the sphere. The current legislation is basically prohibitive: there is an official ban on ICOs, while mining and exchange transactions are banned behind the scenes as well. Ambiguity and uncertainty remain in some cases though.

Stability of Legal Regulation
The Chinese crypto industry experienced a huge, global-scale growth and a critical fall within just one year — from the summer of 2017 to the summer of 2018. The main factor contributing to it was the measures taken by the government, such as the ban on ICOs imposed in September 2017; the administrative bodies continued to increase uncertainty applying sporadic restraints or allegedly threatening to apply them at the local level, as well as in personal communication with crypto entrepreneurs. Impossibility to predict further steps of the authorities leads to high instability of the legal regulation of the cryptocurrency market.

Adequacy of Legal Regulation
Legal regulation of cryptocurrencies in China is rather inadequate; it is prohibitive and fails to contribute to the development of the crypto industry. In fact, mining, ICOs, and the exchange of cryptocurrencies are prohibited in China. At the same time, these prohibitive measures are aimed at the so-called "clean-up", or "cleansing" of China's cryptocurrency industries, which, from the official point of view, has already been successfully completed, rather than at destruction. This rhetoric should be viewed in the same context, in which the "harmonization" of China's public life means the fight with dissidents in order to preserve the existing political order.
Situation with the Rule of Law
China has low indicators of the rule of law, ranking 75th in the world among 113 countries. The conditions of the legal regulation of blockchain and cryptocurrencies are rather unfavorable, and since the values of the sub-criterion of the rule of law are low (0.50), the amount of the difference between weighted (multiplied by Rule of Law Index score) and unweighted assessments are significant. This indicates high risks associated with the general conditions of compliance with legal safeguards in China.
Enabling Infrastructure Environment
7.49 points
China ranks 65th among 193 countries in the UN Global E-Government Development Index in 2018.

China has average business environment development indicators, ranking 78th in the world in the Doing Business rating.