China's inflation rate has dropped to a two-year low, with a year-over-year increase of 0.1% in April, down from 0.7% in March. The decrease in prices is partly due to a drop in food and beverage prices, and there are concerns about the potential dangers of deflation. Despite efforts made, China's current inflation rate is still below the targeted 3% for the year, indicating an uncertain outcome. Some experts have proposed measures to counter deflation, such as distributing cash handouts to citizens to boost demand.

Chinese companies are developing home-grown artificial intelligence (AI) without relying on the latest technology from the US due to current sanctions. Chinese tech firms are studying AI methods to develop AI via weaker semiconductors and combinations of chips to bypass reliance on a single type of hardware. Sanctions imposed by the US against China have deprived Chinese companies of accessing the most advanced chips on the market, including Nvidia's A100 chips and the latest version, the H100. Currently, Chinese companies have access to Nvidia chips A800 and H800, which are only capable of small-scale AI models. Chinese authorities announced an upcoming mandatory review of all generative AI services released within the country before they are allowed to operate publicly.

Chinese officials have drafted a proposal on how to handle crypto-related financial trials, expressing concern about the risks of cryptocurrencies. The proposal relates to the validity of legal acts related to cryptocurrencies, stating that crypto assets have some attributes of network virtual property and if used to settle debts, would be recognized as valid. However, investment contracts entered after Sept. 4, 2017, and any related contracts after the mining ban would be recognized as invalid. Meanwhile, Hong Kong is working to become more accommodating to crypto businesses and aims to become an "international virtual asset center." Despite China's ban on crypto, businesses have found ways to operate, and officials are optimistic about the potential of the metaverse industry.

China's Supreme Court has released guidelines regarding cryptocurrency-related disputes, stating that settling a debt using a small amount of digital assets would be considered legal if both parties agree, according to Wu Blockchain. The court recognized that cryptocurrencies have network virtual properties but emphasized that this approach would only be permitted if there were no other valid reasons against it.

Despite Hong Kong's progress with cryptocurrency adoption, mainland China has not changed its anti-crypto stance in terms of local regulations, according to CPIC Investment Management CEO Chenggang Zhou. While some Chinese state-affiliated banks have opened bank accounts to serve crypto clients in Hong Kong and CPIC launched two cryptocurrency funds in April, Zhou emphasized that CPIC operates as a Hong Kong entity regulated by the Securities and Futures Commission and that Hong Kong regulations allow them to invest in different markets or asset classes, including cryptocurrencies. Zhou doesn't expect the Chinese government to change its crypto policies in the foreseeable future, and Lesperance & Associates founder David Lesperance noted that the crypto market in mainland China is "still effectively shut down."

The United States White House has released a national standards strategy for key and emerging technologies, which includes distributed ledger technology (DLT) and digital identity infrastructure.

BNP Paribas China has announced it will launch a digital yuan wallet management platform in partnership with the state-owned commercial bank, Bank of China. The platform will enable BNP Paribas China to provide its corporate clients with e-CNY services, including wallet opening and management services, token conversion, and spending options. The two banks will also explore other digital yuan-related business avenues, such as offline digital yuan payments, supply chain financing, smart contracts, and cross-border settlements. Analysts believe the involvement of foreign banks in the digital yuan wallet space could facilitate cross-border payments between China and other countries and usher in new opportunities for the internationalization of the yuan.

Henan Cultural Tourism Investment Group, a state-owned investment enterprise in China's Henan province, has created a 150 million yuan ($21.7 million) private equity fund to finance metaverse ventures. The fund, formed in April, aims to integrate resources in the culture and tourism industry to boost the development of virtual reality and metaverse sectors and build "internationally competitive digital industrial clusters." Henan aims to expand its metaverse industry to 30 billion yuan by 2025, according to an action plan published last October. China has been bullish on the metaverse, with various cities and provinces releasing plans for metaverse expansion. (forkast)

The US is locked in a high-stakes race with China to develop artificial intelligence technology and can’t afford to slow down, venture capitalist Vinod Khosla said. He added that efforts to moderate the rate of progress, such as the hiatus in research advocated by leaders including Elon Musk, are misguided or even self-motivated. 

China is actively developing what it calls ‘a second generation internet’ based on blockchain technology. Unlike Western Web3, Chinese Web2 is developing under the supervision of State agencies.