Sunday, 2024 June 23

China’s digital yuan is tested for online shopping, as joins trial in Suzhou

Chinese e-commerce giant ​​ has joined the latest trial of the digital yuan, the electronic currency developed by the People’s Bank of China, the country’s central bank, allowing customers in Suzhou to purchase certain items with the money, according to an official WeChat post by the fintech arm JD Digits on Saturday. The move marks a further expansion of the test in an effort to gain control of value transactions in a cashless Chinese society.

The municipal government of Suzhou, in the Jiangsu province north of Shanghai, has been sending out RMB 20 million (USD 3.06 million) of test money to citizens, as a form of “red packets” via a lottery. Those willing to take part had to register on Suzhoudao, the city’s official public service app, on Saturday and Sunday. They were then required to set up a personal digital wallet with one of the six participating banks—the Bank of China, China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, the Bank of Communication, and Postal Savings Bank of China.

A total of 100,000 red packets will be given away on Friday, each containing RMB 200 (USD 30), which can be exchanged for goods until December 27 in designated physical stores in Suzhou through the “Digital Yuan” app, as well as on ​​’s online platform. In addition, a group of randomly selected consumers will be testing an “offline wallet” function, which enables mobile payments without the need to be connected to the internet.

The development of the digital currency was initiated in 2014, when online payment services run by Ant Group’s Alipay and Tencent’s WeChat Pay have been the mainstream payment methods of the Chinese. The project is considered as a move to limit the influence of the tech giants’ financial services within the country’s traditional financial system. Ant Group experienced a further setback last month, as its initial public offering in Hong Kong and Shanghai was halted by Chinese regulators.

During the Suzhou trial, consumers can for the first time use the digital yuan for online shopping. Earlier in October, Shenzhen already handed out a total of RMB 10 million (USD 1.53 million) in electronic currency to tens of thousands of citizens to let them shop in local stores. Almost RMB 900,000 of it was spent in more than 60,000 transactions, according to Xinhua.

Steady push

The People’s Bank of China is broadening the use of the new currency and said that it will also be tested in Beijing, Shanghai, and Hangzhou, as well as less wealthy cities such as Lanzhou, Urumchi, and Lhasa, but it hasn’t disclosed a timeline for an official launch.

“We aim to steadily push forward the research and development of digital currencies, to carry out controllable pilots in an orderly manner, and to improve the legal framework for digital currencies,” wrote Yi Gang, the central bank’s governor in a recent article.

Cross-border payments of the digital yuan are also progressing. Yu Weiwen, the president of the Hong Kong Monetary Authority, said that it has been partnering with the research arm of the People’s Bank of China in technology testing.

Wency Chen
Wency Chen
Wency Chen is a reporter KrASIA based in Beijing, covering tech innovations in&beyond the Greater China Area. Previously, she studied at Columbia Journalism School and reported on art exhibits, New York public school systems, LGBTQ+ rights, and Asian immigrants. She is also an enthusiastic reader, a diehard fan of indie rock and spicy hot pot, as well as a to-be filmmaker (Let’s see).

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