The "Fapiao" Case: How China Is Fighting Corruption With Blockchain

The latest advancement in the field relates to the country's old corruption staple - fake invoices used to embezzle corporate and state funds.

Tax authorities of the city of Shenzhen and a state-owned aerospace firm have recently turned to blockchain for immutable and transparent record-keeping, steadily putting an end to paperback corruption.

Tax evasion is a serious crime in China - sometimes punishable by death - but that doesn't seem to hinder the counterfeit fapiao industry.

On Aug. 10, local news platform EEO reported that China's first digital invoice on the blockchain was issued in the city of Shenzhen, where the aforementioned collaboration was announced.

Thus, Tencent has created a pilot blockchain ecosystem for invoices designed for comprehensive use by consumers, merchants and tax authorities, according to local publication.

Cai Yunge, the general manager of blockchain at Tencent, was quoted by EEO as saying that the new system achieves "a frictionless link between consumer scenarios and tax services." Consumer payments are facilitated through Tencent's WeChat, and an invoice suitable for further inspection and management by tax authorities is reportedly generated in "One click."

The next player to adapt blockchain for fighting invoices-induced corruption is the state-owned China Aerospace Science and Industry Corporation Ltd. According to an article in the official state newspaper, People's Daily, that was republished by the State Administration of Science, Technology and Industry for National Defence, blockchain will help innovate the supervision of invoices for tax purposes nationwide.

China Aerospace, in turn, uses electronic invoice services that are end-to-end, covering issuance, delivery, filing, inspection and reimbursement for the country's taxpayers and authorities.

China Aerospace has now created a blockchain system to allow for authenticated and "Credible" invoice issuance, traceable circulation, and efficient and cost-effective oversight by tax authorities - just like in Shenzhen.

China Aerospace's representatives are confident about fighting the fapiao corruption at its root with blockchain technology.