TL;DR:
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The Chinese government is leading the charge in developing the metaverse as a tool to support the country’s economy, focusing on industrial and healthcare applications, rather than consumer-oriented leisure activities.
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Digital twins, mixed reality, and blockchain technology are the three main components of China’s definition of the metaverse, although the government has effectively banned cryptocurrencies, so digital assets are not a key part of the Chinese version of the metaverse.
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Although the Chinese government’s influence has led to a more centralized and regulated metaverse than those proposed by Western companies, government support could help prevent the fickle tech sector from causing the metaverse to collapse, as has happened with previous tech trends.
The Red Metaverse
The Chinese government’s vision of the metaverse is primarily focused on industrial applications, such as healthcare and industry, rather than consumer-focused entertainment, according to a recent report by WIRED. The report highlights that while many Chinese startups and tech investors jumped on the metaverse trend following Meta’s pivot to virtual worlds, the government’s involvement in backing strategic technologies and setting rules to govern the space has led to a more government-led interpretation of the concept. The government-backed definition of the metaverse involves the integration of digital twins, mixed reality, and blockchain, with a focus on using the technology to support the physical economy.
China’s metaverse vision is influenced by its regulatory crackdowns on the blockchain and gaming industries, the latter of which has formed a pillar of the Western metaverse. However, the government is willing to back pieces of the metaverse that it feels could be directly beneficial to the economy, as seen with its inclusion of digital twins in Beijing’s 14th Five-Year Plan. Chinese startups, such as HiAR and Digitwin Technologies, have already pivoted in anticipation of investment from the government, shifting their focus towards industrial applications.
The report suggests that the Chinese government’s involvement may mean that the metaverse is less susceptible to the fickle tech sector, which moves on from trends at great speed. Startups often try to be “in the middle of a whirlwind,” meaning the right trend with explosive growth potential. Despite the buzz in the private sector moving on to generative AI, the government’s vision hasn’t changed, and it is focused on the long-term with policymaking.
Different ways of web3
Despite the varying interpretations of the metaverse, China’s approach to virtual worlds is quite different from the rest of the world. The Chinese government has exerted significant influence over the country’s tech sector, and its backing of the technologies that it deems strategic and regulations on what can go on in the metaverse means that what’s emerging in China is very different from the metaverses envisaged in the West. While companies like Meta, Microsoft, and Decentraland focus on creating consumer-focused metaverses, China’s virtual worlds are more about putting tech to work to support the economy.
In China, the metaverse is seen as a vague concept that involves merging digital and physical spaces. The country’s definition of the metaverse is composed of three technologies: digital twins, mixed reality, and blockchain. Gaming, which has formed a pillar of the metaverse in the West, has also come under pressure from the government amid fears that young people were becoming addicted to online games. Between 2018 and 2022, the government froze the issuance of licenses for new games for 17 months in total and, in 2021, limited minors to three hours of gaming time per week.
However, the Chinese government is willing to back pieces of the metaverse that it feels could be directly beneficial to the economy. Digital twins were included in Beijing’s 14th Five Year plan, the enormous economic strategy document that sets the national agenda from 2021 to 2025. The plan identified innovations the government would like to see more of, including near-eye display, rendering processing, sensory interaction, and network transition.
Although the government has its vision for what metaverse tech is going to do for China, support is conditional. China’s virtual worlds need to serve China’s physical economy. Siri Chen, HiAR’s marketing director, said, “At the current stage, everyone emphasizes industrial applications from education, medical, travel, and industrial development.”
For Eric Liu, co-founder and CTO of Shanghai-based digital twin company Digitwin Technologies, the 14th Five Year Plan has helped underpin his company’s shift to focus on energy and manufacturing—“a field that previously wasn’t ready” for this kind of tech, he says. The Chinese government’s desire to shape the metaverse may limit its scope, but state support may mean it doesn’t fall victim to the notoriously fickle tech sector, which moves on from trends at great speed. Startups often try to be “in the middle of a whirlwind,” meaning the right trend with an explosive growth potential.
Jingshu Chen, co-founder of VR company VeeR, said, “If anything gets buzzy in China, you see companies swarm into the space. However, if growth isn’t as fast as their expectation, more companies are also likely to pivot.” The Chinese VR industry has been through an accelerated boom-and-bust cycle and is in the middle of another period of rapid growth.
High-profile, consumer-focused metaverse projects have already seemed to quietly disappear, and companies have found that a number of clients are paying for metaverse services only “for show” rather than because they thought they had real utility. However, the government’s vision hasn’t changed, and it remains focused on the long-term with policymaking, despite the hype around other tech trends such as generative AI
14th Five-year plan
The Chinese government’s approach to the metaverse is aimed at applying technology to support the country’s economy, with a focus on healthcare, industry, and other sectors rather than just consumer applications. The Chinese state has already backed technologies that it considers strategic and has set rules governing the use of the metaverse. According to Brady Wang, an associate director at tech market research firm Counterpoint, the Chinese government is leading the metaverse concept, rather than the companies themselves.
China’s central commission for discipline inspection, a body responsible for investigating corruption within the Communist Party, published the state’s definition of the metaverse in December 2021. According to this definition, the metaverse is made up of three technologies: digital twins, mixed reality, and blockchain. However, China has already effectively banned cryptocurrencies, which eliminated one of the pillars of its metaverse. Despite this, the government is willing to support any piece of metaverse technology that it feels could be directly beneficial to the country’s economy.
Digital twins are already included in the 14th Five-Year Plan, a government economic strategy document for the period between 2021 and 2025. The plan identified innovations that the government would like to see more of, including rendering processing, near-eye display, sensory interaction, and network transition. The government’s vision for the metaverse is about serving China’s physical economy, rather than creating a virtual world where people can socialize, work and play.
Although startups in China are notorious for following trends, the government’s willingness to back the metaverse may mean that it does not fall victim to the notoriously fickle tech sector, which tends to move on from trends quickly. As a result, the government is determined to pursue the metaverse vision, regardless of the latest trends in tech
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