China’s digital yuan currently stumbles with indifference among domestic consumers …
China has big ambitions for the digital yuan – Photo: CGTN As China moves towards issuing the world’s first government digital currency, the debate about it is getting hotter than ever. Historian Niall Ferguson describes China’s e-yuan as a “dangerous challenge” to the US financial hegemony over decades. Meanwhile, Michael Hasenstab, chairman of investment firm Franklin Templeton, said e-CNY could undermine the role of the dollar as the reserve currency of the world. However, according to Bloomberg, when talking to people already using the digital yuan in China, the response was not very positive. APPEARANCE OF DOMESTIC USERS In Shenzhen – the tech hub is experimenting with using the digital yuan – most Bloomberg survey participants showed little interest in switching from popular mobile payment systems. currently such as Alipay of Ant Group or WeChat Pay of Tencent. 
Ant Group and Tencent are dominating the digital payment market in China with WeChat Pay and Alipay apps – Source: iResearch / Bloomberg Some are concerned that the digital yuan could be a tool for the authorities to access their financial data in real time. “I am not interested at all,” said Patricia Chen, 36, who works in the telecommunications industry, Chen is one of more than 500,000 people in Shenzhen eligible to test the yuan. While none of the Bloomberg survey participants had in-depth knowledge of the role of the digital yuan in the global foreign exchange market, their indifferent response showed the challenges faced by the administration. Chinese President Xi Jinping faces when he applies this currency at home and abroad. “I’m not interested at all” … “I’m afraid the authorities can track all my transactions” … E-CNY users According to Bloomberg, even if the Chinese authorities persuade or force citizens to accept the digital yuan, it will take a long time to do the same with international consumers and businesses. they have been wary of Beijing’s capital controls so far. With Vera Lin, 25, working for a finance company in Shenzhen, using the digital currency is not too difficult. However, Lin argues that users like her need a greater incentive to switch to the digital yuan altogether, because existing digital payment options are so reliable and work seamlessly within the platforms. other services, from social networks to e-commerce. Even a 10% discount on RMB purchases was not enough to lure Lin. The 25-year-old says platforms run by companies like Ant regularly offer discounts on everything from ride hailing to food delivery. Meanwhile, Jan Chen, a 33-year-old civil servant, is concerned about privacy issues. “I’m afraid the authorities can track all my transactions,” Chen said. 
China is testing the digital yuan in several provinces, including the largest scale in Shenzhen city, Guangdong province – Photo: Xinhua In a country where tax compliance is not as strict as China, many entrepreneurs are wary if information about their transactions is fed directly into government databases. Some fear that data from digital yuan transactions could be collected in real-time to monitor political disagreements or international businesses. competition with Chinese state-owned enterprises. Launched in 2014, the digital yuan project was promoted by then PBOC Governor Zhou Xiaochuan, who has long advocated the creation of a new international data currency to replace the dollar. . Zhou sees the e-CNY as a tool to counter potential threats from cryptocurrencies like Bitcoin or Facebook’s Diem (formerly known as Libra). THE COUNTRY IS HARD, IT’S ALTERNATIVE The PBOC has tried to quell these concerns by freeing the use of the digital yuan to retailers (they currently have to pay a 0.6% fee for transactions on Alipay and WePay), and pledged to that most of their transactions will be anonymous. In March, Mu Changchun, director of the PBOC’s Digital Money Research Institute, said the central bank would not directly grasp the user’s identity, but that they could get this information from financial institutions. in the event of a crime. Zennon Kapron, CEO of consulting firm Kapronasia, said that if the digital yuan is not gaining traction in the long term, the Chinese government may turn to coercive use. Beijing has begun to take moves to gain control over the data collected by technology and financial companies like Ant and Tencent. According to Francis Chan, a senior analyst with Bloomberg Intelligence, even if Chinese lawmakers do not go that far, they can ask for more co-workers from the vendors and operators of the Internet platform. digital yuan on your own payment options. “The e-CNY only partially solves the problem, which is the payment infrastructure part. However, just solving this problem does not help solve the whole problem “… Michael Ho, Director of Financial Services, Oliver Wyman Recently, the platforms MYbank (invested by Ant) and WeBank (invested by Tencent) have been added as options on the e-CNY application, although not yet available. Chan as well as Bloomberg Intelligence analyst Sharnie Wong forecasts that the digital yuan could be put into use across China before the 2022 Beijing Olympics and take 10% of the market share in electronic payments in the country by year. 2025. This is not a small number but still cannot compete with the dominant positions of Alipay and WePay – two e-wallets with total market share of over 90%. In the country it is difficult, to persuade international users to use the digital yuan is much more difficult. “The e-CNY only partially solves the problem, which is the payment infrastructure part. However, simply solving this problem does not help solve the whole problem, “said Michael Ho, director of financial services at Oliver Wyman, commented. 
Many people are skeptical of the ability to fulfill China’s ambitions to internationalize the yuan – Photo: Getty Images According to Zennon Kapron, on the international arena, despite its great ambitions, the digital version of the yuan is unlikely to boost the share of the Chinese currency’s global payments by one percentage point, from below. 3% current. Many analysts are also skeptical of the yuan’s international application ambitions in Xi Jinping’s plan to reduce dependence on the US-led financial system.
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