During the Spring Festival holidays, the cities in China organized digital yuan activities with a combined value of nearly $26.6 million in an effort to increase consumption, says a report from Global Times.
In recent years, China has seen a fast development of the digital yuan, often known as e-CNY. This currency has emerged as an important instrument for local governments to use in their efforts to stimulate economic growth.
The use of digital yuan for consumption promotion
During the first Spring Festival holidays after China optimized its COVID-19 prevention measures, many local governments issued digital yuan coupons as a way of promoting consumption.
For example, the cities of Jinan in Shandong Province and Lianyungang in Jiangsu Province distributed digital yuan vouchers during the Christmas shopping season to encourage more people to spend money.
Some local governments used digital yuan to subsidize businesses as a way of supporting economic recovery. Shenzhen in Guangdong Province, for instance, handed out 100 million yuan to subsidize the catering industry in the form of digital yuan.
During the Spring Festival in China, about 200 digital yuan activities with a combined value of over 180 million yuan were launched throughout the country.
Commercial institutions also participated in promoting consumption through digital yuan. Their activities covered a wide range of sectors, including mobile communications, supermarkets, transportation, tourism, and more.
Data from Meituan, a China-based e-commerce platform, showed that the digital yuan given out by the Hangzhou government via the platform ahead of the holidays was taken up within 9 seconds.
This is a reflection of the rising excitement among Chinese consumers for the digital yuan, as well as their openness to adopt new modes of payment.
It is encouraging that the digital yuan is being considered as a potential instrument for increasing consumer spending and facilitating economic recovery.
It shows that China is making significant progress in digitalizing its economy and that the digital yuan has the potential to become a key tool for promoting economic growth.
The growing excitement among Chinese customers for the digital currency is also a favorable indication for the future of digital payments in China, which is a nation that has historically shown a significant amount of skepticism towards cryptocurrencies.
China and the CBDC
In recent months, the government has enacted new goals and features intended to increase CBDC adoption. On February 1st, top governing party leaders in Suzhou tentatively established a key performance indicator of $300 billion in e-CNY transactions by the end of 2023.
Considering total e-CNY transactions barely topped $14 billion in October, two years after the introduction of the CBDC, the goal seemed lofty, they thought.
In early January, an upgrade was released for the e-CNY wallet software that would enable Android users to conduct contactless payments even when their phones lacked access to either the internet or electricity.
A former official at China’s central bank said in December that e-CNY testing had produced less-than-desirable outcomes due to low and inactive use.