The digital yuan, China’s official digital currency, is reportedly gaining traction among overseas visitors and locals alike. Several thousand athletes and coaches had the opportunity to interact with the digital yuan during the Hangzhou Asian Games held in October. They learnt how to conduct transactions using the new technology in specially set up demonstration booths at the Games Village, managed by state-run banks. The four-month-long sporting event served as an international launchpad for the digital yuan, offering first-hand interaction with its safety measures and convenience.
To cater to foreign visitors, several new features linked to the Central Bank Digital Currency (CBDC) were introduced including an English version of its app and the possibility to link it with Hong Kong’s Fast Payment System platform. In a significant move, visitors to China can now register and open a digital yuan wallet using an overseas mobile phone number. They can also recharge these wallets using overseas Visa and MasterCard bank cards.
Furthermore, the Industrial and Commercial Bank of China, among the country’s big four state-owned commercial banks, revealed a shift in transaction handling. While previously, overseas visitors could only ‘pay-as-they-go’, they can now ‘top up first, and use later’, facilitating smoother transactions.
The Chinese payment ecosystem is seemingly experiencing the benefits beyond just the CBDC. According to Alipay, there has been a significant rise in average daily payments made by inbound tourists since the beginning of the Asian Games. Dong Ximiao, a prime researcher at the China Merchants Union, attributes this influx to the optimizing payment experience for overseas guests while contributing to the country’s retail market.
The use of CBDCs extends beyond visitors in China. Increasingly, Chinese public sector firms are introducing digital yuan for their employee salaries. For instance, the bureau running financial operations at the Zhongkai High-tech Industrial Development Zone in Guangdong Province recently confirmed it now pays its employees in digital yuan. This move is a solid stride in the broader implementation of this financial technology. In fact, Changshu, a city in the Jiangsu Province, has already decided to pay the full salaries of its public officials and employees in the digital yuan starting from May 2023.
In conclusion, China’s digital yuan attempts to bridge a digital divide, providing a smooth transactional experience for foreign tourists while progressively integrating the new technology into local wage systems. Having said so, how this grand digital experiment rolls out in the long run and impact it creates on the global financial landscape is a story still unfolding.