China’s blockchain driven mutual aid program signs 100 million customers


After President Xi’s recent call for everyone in his country to embrace blockchain technology, one would think that China might have been biding its time regarding any commitments to the innovative decentralized ledger system. Nothing could be further from the truth. The government’s attitude may seem to have become “Blockchain, not Bitcoin”, but the private sector has endeared itself to the new technology for some years now. One example is “Xiang Hu Bao”, a blockchain-based mutual aid platform, which in only one year has on-boarded in excess of 100 million customers.

Xiang Hu Bao literally means “mutual protection” and loosely translated can be read “Lend a helping hand”. Health assistance for 100 ailments is provided by the company, while participants share the over all costs. Previous attempts at mutual aid programs have suffered from fraud, but the system, according to Yahoo, utilizes the Alipay “proprietary consortium blockchain technology, which ensures the process is tamper-proof”. Claims are submitted via an Alipay app, which then completes a review and approval process before disbursing a one-time payout of up to RMB 300,000 (~US$43,000). A review board of qualified volunteers reviews disputed claims.

Alipay claims to be the world’s leading payment and lifestyle platform, which is owned and operated by Ant Financial Services Group. Xiang Hu Bao is not direct insurance, but a form of “gap” coverage. Ming Yin, Vice President of Ant Financial, notes that:

Xiang Hu Bao was designed with inclusiveness in mind. We hope Xiang Hu Bao can support participants to help one another by providing a trustworthy platform in addition to the medical care protection provided by China’s social security and premium health insurance companies.

The assistance program primarily supports low-income individuals from lower tiered cities and rural communities. Nearly two-thirds of its members earn less than RMB 100,000 (~US$ 14,000) on an annual basis. Surveys of the members have also shown that 90% of them already have other insurance coverage from government plans, while one third plan to purchase ones that cover in the case of a catastrophic illness.

According to Zhu Minglai, director at the Health Economics and Medical Security Research Center, Nankai University:

The majority of Xiang Hu Bao’s participants are from middle or low-income communities who are at great risk of falling into poverty if they become critically ill. Xiang Hu Bao has enabled low-income communities to receive basic health protection at an affordable cost and supplements other health plans provided by the public and private sectors in China.

After President Xi’s ringing endorsement of blockchain technology, there have been several reports touting the successes that have already been achieved in a short space of time. Three other examples of support include:

  • Bank of China has used a blockchain platform to improve the efficiency of the entire insurance industry;
  • The Shanghai Municipal Commission of Commerce, Shanghai Customs, and representatives of six banks located across the city have formed the Blockchain Alliance, a collective grouping of like interests with the expressed mission of using “blockchain for enhancing various aspects of international trade”;
  • In addition to private sector investments, the Chinese government has decided to invest $2 billion to build the country’s blockchain infrastructure by 2023.

These positive developments follow weeks of intense investigations and raids to shut down any businesses that support the trading of cryptocurrencies in such cities as Beijing, Shenzhen, and Shanghai, with other cities to follow. The message is clear to all observers in China: “Blockchain, not Bitcoin”.

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