The State Taxation Administration of China, in coordination with financial regulators, has called on banks and local authorities to adopt blockchain and privacy computing technologies to enhance the country’s “bank-tax interaction” model, a key initiative aimed at improving financing access for small and micro enterprises.
The guidance, released earlier this week, encourages deeper integration between tax systems and financial institutions by leveraging advanced technologies to enable secure and efficient data sharing.
The “bank-tax interaction” framework allows banks to assess the creditworthiness of businesses using verified tax data, helping to address longstanding financing challenges faced by smaller firms.
According to the notice, blockchain technology can help ensure data integrity and traceability, while privacy computing methods, such as secure multi-party computation, allow sensitive information to be shared and analyzed without exposing raw data. This combination is expected to strengthen trust between institutions while maintaining strict data protection standards.
Regulators emphasized that upgrading the model will improve the accuracy of credit assessments and expand the availability of loans to small businesses, which often struggle to access traditional financing due to limited collateral or credit history.
By enhancing the quality and usability of tax data, authorities aim to unlock new lending opportunities and support economic growth.
The move also reflects China’s broader push to integrate fintech solutions into public administration and financial services.
In recent years, the government has actively promoted blockchain innovation across multiple sectors, including supply chains, trade finance, and digital identity systems.
While the directive stops short of mandating immediate implementation, it signals a clear policy direction toward greater digitalization and collaboration between tax authorities and financial institutions.
Analysts say the initiative could further strengthen financial inclusion and improve the efficiency of credit markets if widely adopted.
Overall, the effort underscores China’s commitment to leveraging emerging technologies to modernize financial infrastructure and support its vast network of small and medium-sized enterprises.
