JD.com Continues e-CNY Support, Makes Fortune 500’s Top 100
As China’s largest online retailer gets ranked in the top 100 of the latest Fortune Global 500 for the first time, JD.com has continued its support for local governments’ test runs for the use of the digital yuan (e-CNY).
The e-commerce platform has been working with the People’s Bank of China in the trial phases of the e-CNY including expanding its application to payroll payment to some of its employees and working with partner city councils to dole out red packets to citizens at random.
The latest is last week’s partnership with the Bank of Communications (BCM) to issue 500,000 e-CNY (DC/EP or Digital Currency/Electronic Payment) packages in Shanghai and Suzhou starting August 6 – after having supported e-CNY’s multiple test runs in Beijing and Chengdu.
Worth CNY20 million in all, each individual resident in the two cities who apply for the packages until Aug. 12 gets a CNY20 red envelope and CNY20 coupon.
Residents who win the lottery from Aug. 13 to Aug. 16 have until Aug. 29 to use their packages at online and offline locations where e-CNY payments are accepted while the coupons can be used on the JD app to purchase first-party products through BCM’s e-CNY wallets.
Also in the past week, the Chinese retailer announced an innovative cooperation model customized for BVLGARI, a first time the Italian luxury brand has ever worked with an online third-party platform in its 137 years of business.
It was in the same week that JD.com rose 43 places in the past year to make the latest Fortune 500 annual listing released on August 2.
According to Fortune, China’s second-largest e-commerce giant, made the list for its nearly 500 million customers, a revenue that soared 40% to $32 billion in Q1 of 2021 when compared with the previous year and new partnerships with popular brands like Starbucks and sports retailer Decathlon.
JD.com is the first virtual platform to accept e-CNY and seems open to more cross border exploration cooperation even as non-cash transactions have risen in recent years particularly in mature markets and China.
In the countdown to the e-CNY public rollout, JD.com’s growth in its global reach is significant as there are emerging indications that the yuan is achieving major progress in becoming an international currency in terms of payment, trade finance, foreign exchange, investment and as a reserve asset.
The yuan gained wider recognition as reserves held by central banks increased to $267.5 billion in Q1 of 2020 (almost 3x of 2016 amount); foreign institutions picked up CNY3.25 trillion worth of bonds by the end of 2020 – about a 49% increase year-on-year.
A Bank for International Settlements survey shows that the average daily turnover of yuan foreign exchange transactions reached $284.2 billion in April 2019 to see an increase of more than 40% from three years earlier.
According to Swift, the value of yuan payments has maintained rapid growth for four consecutive years at $69 trillion in 2020. By June 2021, it became the fifth most active currency for domestic and international payments by value.
Some reserve managers see potential in the yuan and expect the International Monetary Fund to increase its weighting at the next special drawing rights reassessment.
While the e-CNY rollout will help increase oversight of money flows, raise the efficiency of cross-border payments and facilitate yuan internationalization, HSBC said in a report, Beijing has to relax capital restrictions further and international users’ confidence in the yuan has to grow too.