China Proposes Digital Yuan’s Accelerated Adoption in Beijing and Shanghai

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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January 23, 2024 05:17 EST

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China authorities have proposed new policies to accelerate the adoption of digital yuan in designated districts in Beijing and Shanghai.

According to Xinhua, China State Council’s General Office has announced a comprehensive reform initiative for Shanghai’s Pudong New Area, scheduled to run from 2023 to 2027.

China State Council Reform Plan for Shanghai

This plan is focused on enhancing the area’s reform, with the ultimate goal of establishing the Pudong District as a frontrunner in modernization.

The reform plan outlined includes a significant focus on the pilot use of digital yuan in various sectors in Pudong, underscoring underscores the potential of digital yuan in modern financial and economic systems.

One of the key aspects of this reform is the integration of digital yuan into trade settlement, e-commerce payments, carbon trading, and green power trading. This move is expected to standardize and expand the application scenarios of digital yuan, particularly in the use of fiscal funds.

In addition to these applications, the plan also focuses on supporting headquarters institutions in developing offshore trade and economic businesses with the aid of digital yuan.

Municipal Committee Member Advocates for Digital Yuan

Meanwhile, Beijing Municipal Committee Member and Hong Kong Professionals Association President Fung Kwok-yau recently urged the accelerated progress of Beijing’s “Digital Yuan Adoption Demonstration Zone,” aiming to publicize digital yuan.

During an interview with Ta Kung Pao, Fung suggested that Beijing should expand digital yuan’s application by installing e-CNY terminals in the local stores at famous sightseeing attractions, popular malls and shopping districts.

Fung pointed out that currently, the promotion of digital yuan faces several challenges: late entry into the contactless payment market, high user acceptance barriers, difficulty in sustaining subsidies, and the challenge of re-cultivating user habits.

For instance, Fung said that the culture and tourism departments should take the lead, breaking through by popularizing the concept of central bank digital currency (CBDC) and how to use digital yuan.

According to Fung, for small and medium-sized merchants that have already adopted digital yuan terminals, some incentives could be provided to encourage them to help consumers understand and use the currency.

“To increase the citywide promotion of digital yuan applications, a regular promotion mechanism needs to be established,” said Fung. “At the same time, measures to encourage consumers to use digital yuan should be implemented, such as using electronic consumption coupons.”