China’s digital economy growth could garner momentum for e-CNY rollout
With a public rollout expected next year, efforts to grow the digital yuan’s (e-CNY) usage continue to take new forms of late in a slight move away from city-wide pilot trials.
The shift, focused on enriching users’ experience with regards to payment, is coming at a time when China’s digital economy reportedly recorded significant improvement.
The digital yuan, as part of China’s digital currency electronic payment project, was one of the highlights at the just-concluded 2021 China International Fair for Trade in Services held in Beijing from Sept 2 to 7. The event has a “Digital RMB Avenue” set up for about 20 stores that accept digital RMB to give spectators an experience of the digital currency for payment.
It had giant retailer’s JD Technology showcase its practice in the digital currency – for the first time – with services in supply chain, applications and technology. Several other public companies are bringing e-CNY products and services to market too.
There is also the Lize financial business zone in Beijing’s Fengtai district. The People’s Bank of China (PBoC) established the Digital Currency Research Institute there to integrate the advantages of technological resources to create a digital currency technology and application ecosystem.
The zone is meant to be leveraged to promote the pilot application of the digital yuan and build an application ecosystem around it.
Meanwhile, with the e-CNY expected to completely replace physical cash, and Chinese consumers’ financial literacy now found to be above the global average and far ahead in emergency savings, the digital currency’s eventual rollout could garner huge momentum.
According to a Sina Institute for Financial Studies report citing the PBoC as source, the financial literacy index of Chinese consumers was up 2.04 from 2019 to reach 66.81 in 2020. Chinese consumers with graduate degrees or more have an average score of 70.29, while those with primary school degrees or below have an average score of 60.67.
China’s market entities has grown as well, according to the State Administration for Market Regulation. It says their total number has risen from 55 million in 2012 to 146 million at the end of July – companies at 46 million while self-employed businesses reached 98 million.
All these complement official figures released this week that show that China’s foreign trade is growing, as well as its digital economy. It will bode well for planned domestic and cross-border e-CNY transactions.
Data from the General Administration of Customs showed that the country’s total imports and exports expanded 23.7% year on year to CNY24.78 tln (about US$3.84 tln) in the first eight months of the year, marking a 22.8% increase when compared with the level registered during the same period in 2019.
Both exports and imports logged double-digit growth in the January-August period, surging 23.2% and 24.4% from a year earlier, respectively while trade surplus increased 17.8% year on year during the same period to CNY2.34 tln.
It also added that China’s trade with countries along the Belt and Road rose 24.6 % to CNY7.29 tln during the same period.
In a related development, China’s Minister of Industry and Information Technology, Xiao Yaqing, disclosed at the opening ceremony of the China International Digital Economy Expo 2021 that China’s digital economy represents a new form of production. He says the digital economy leads the way in economic development and represents a new highland of global technological innovation.
Yaqing’s comment follows a report released during the expo which opened Monday in north China’s Hebei Province that the country’s digital economy continued to gain momentum in driving production, investment, consumption and trade in the first half of 2021.