Chinese residents in the city of Suzhou made close to 20,000 transactions in a digital yuan trial on e-commerce giant JD.com. According to local reports, the first transaction occurred just 2 seconds after the trial commenced, taking 0.5 seconds to complete.
The Suzhou trial was the latest by the People’s Bank of China, and perhaps its most significant yet. This was the first trial in which the bank launched offline payments using near-field communication.
The PBoC distributed 20 million yuan ($3 million) in a lottery, with the winners getting to finally use the state-backed digital currency on Friday. The residents can still make payments on over 10,000 local stores and online platforms including JD.com, DiDi, Meituan and Bilibili.
According to China’s English language newspaper Global Times, the Suzhou residents took to the digital yuan payments as soon as the trial started. Citing data from JD.com, the paper revealed that most of the payments were by the younger generation. The largest online payment with the digital yuan exceeded 10,000 yuan ($1,530).
The PBoC is integrating financial systems and features that have worked in China in its digital yuan trials. According to Cao Yin, the managing director of the Shanghai-based Digital Renaissance Foundation, the bank is also relying on social networking to promote the digital yuan. Yin revealed that the PBoC has also been poaching talent from local digital currency firms in its quest to fast-track the project.
However, despite the flurry of trials in recent months, Yin believes that the bank is treading cautiously. The Chinese government is seeking to ensure that once it launches the CBDC, there will be no glitches. “Once the currency is launched, it will be extremely difficult to retrieve it from users or ban its usage if any problems occur,” he told the paper.
The official launch is expected to be just before the 2022 Beijing Winter Olympics. However, according to Yin, it might be later than that. He predicts the full launch to be in 2023.
He stated, “China should be the first country to launch a digital currency, while countries like the US are looking to summarize China’s experience and avoid risks. In a sense, we have only ourselves to compete with on this matter, and there’s no need to rush it.”
The latest trial comes at a time when the ex-PBoC governor Zhou Xiaochuan reassured the world that the digital yuan is not seeking to replace existing currencies. Speaking at a Shanghai event, he claimed that the PBoC is seeking to complement the existing fiat currencies as well as offer a faster alternative.
He stated, “Some countries are worried about the internationalisation of yuan. We can’t push them on sensitive issues and we can’t impose our will. We must avoid the perception of great power chauvinism.”