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China Pushes for Broader Use of Digital Currency

China is ramping up efforts to roll out the digital yuan to the broader population, as the country’s technology giants jump on board. However, one of the challenges is how to make Chinese citizens who already use two dominant mobile payment systems run by these same tech firms, begin paying with the digital yuan. Also known as the e-CNY, it’s designed to replace the cash and coins already in circulation.

China’s digital yuan is a form of central bank digital currency (CBDC) which many other central banks around the world are also working on — though the Chinese central bank is way ahead of its global peers. To date, the PBOC has been piloting the digital currency, and tens of millions of digital yuan have been handed out to citizens in a handful of cities in China. Chinese authorities are now stepping up their ambition to expand the use of e-CNY to more citizens even though a nationwide rollout date has not been set.

The PBOC launched an app to allow users in 10 areas, including major cities Shanghai and Beijing, to sign up and use the digital currency.  Perhaps the most significant push came when a popular social media and mobile payment app would support the digital yuan. While the PBOC has used digital yuan lotteries to effectively hand out free money and get users on board, a Chinese analyst questioned what will entice citizens to continue using the digital yuan after they’ve spent that money.

China’s central bank previously stated its intention to make the digital yuan available to visitors to the Beijing Winter Olympics. The venues for the 2022 Games in Beijing will be able to use the e-CNY app there. For the foreseeable future, even if there is an uptick at the Winter Olympics, the transaction turnover rate of the central bank digital RMB is likely to be very tiny in comparison to popular payment platforms

However, over time, there may be some niche areas where the digital RMB could see greater use, such as paying certain types of government-related bills, or for things like transportation, particularly if the central bank offers incentives like red envelopes and other inducements.

Meanwhile, China’s “zero Covid” approach has led to strict measures to try to stamp out the virus in China — that means very few foreign visitors will be attending the Winter Olympics in Beijing. Though the Olympics were originally viewed by Chinese authorities as a chance to showcase the potential use of the currency in an international setting, few non-Chinese citizens will likely use the digital RMB wallet at the Games.

For the internationalisation of RMB, it is a natural process and the goal is not to replace the U.S. dollar or any other international currency. The goal is to allow the market to choose and to facilitate international trade and investment.

As reported by OpenGov Asia, China Association for Science and Technology (CAST) has provided continuous support to release the potential of digital innovation and foster new drivers of growth. CAST urged to enhance digital literacy of the general public to achieve inclusive development goals beneficial to all. CAST called on efforts to deepen international cooperation and build a global network on digital governance.

The nation is already a leader in the 4th generation of the industrial revolution. Digital transformation is of great importance for the survival and development of small and medium-sized enterprises (SMEs), and special assistance will be provided for SMEs to enhance their intelligent manufacturing capacity. Experts from China and abroad discuss the endless frontier of digital technology and inclusive development as a solution to the digital divide.

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