China is already becoming In a cashless society, most of these electronic transactions occur in privately owned apps, outside the direct scope of the state. The official yuan changes that and gives Beijing an unprecedented amount of information about what and where people are spending money.
The world’s second-largest economy has been experimenting with digital yuan in Chinese cities for the past two years. This is to prepare China for a nationwide expansion that may lead the West in the global competition to develop state-sponsored digital currencies. ..
Its national launch timeline has not yet been decided, But Beijing arguably intended that the Olympics would be an important milestone on the road to widespread adoption.
“The Olympics would have been the first real opportunity for tourists and Chinese citizens to get used to digital yuan, but the door closed when the Chinese government decided to severely limit the number of spectators in the Olympics.” Said senior Craig Singleton, a Chinese fellow at the Democratic Defense Foundation, a DC-based research institute.
“That decision alone, above all, could further delay the mass adoption of digital currencies.”
Calm international debut
Chinese companies and government officials have been promoting the convention as a digital source opportunity in recent weeks, despite the fact that attendance has been shown to be minimal.
Anyone — a Chinese or foreign visitor — someone who isn’t Part of that system is totally forbidden to participate in the game, further limiting the size of the spectacle.
Even if many people attending the event use digital yuan, “it won’t hurt the overall trading level,” he said, senior adviser to China’s Business Economics at the Center for Strategic and International Studies. Scott Kennedy, chairman of the council, said. And international research.
Suffering from traction
Digital source is already I’m having a hard time gaining traction in China.Transactions using currency In the second half of 2021, the total amount was only $ 8.37 billion, equivalent to $ 1.4 billion per month.
This shows some progress over a two-year trial period, but it’s still far from bringing serious challenges to personally owned digital payment apps.
For example, Ant Group revealed in its 2020 stock exchange filing that the Alipay app processed an average of $ 1.6 trillion each month. This is more than 1000 times the monthly trading volume of the digital source.
The Chinese government initially limited the use of digital yuan wallets to lucky draw winners, and then made it easier for the general public to try cryptocurrencies. Earlier this year, for example, the People’s Bank of China released a wallet app in the Apple and Android stores that can be used in 10 cities and regions that are piloting currencies, along with the Olympic venue. The pilot app is now available to everyone in these areas, not just the lottery winners.
The central bank advertised a surge in numbers among trial users last year As a sign of the success of the digital source. By the end of December, the app had been downloaded by 261 million individuals. According to central bank data, it is 19% of China’s population.
However, there are still barriers to spending money. Other than the Olympic alien exemption, anyone wishing to trade with a digital yuan will need to download and register the Central Bank app and add money from their account at one of the designated Chinese banks. ..
Currency can only be used in the 10 cities and regions where pilots are provided, along with participating Olympic venues.
Consumers seem “don’t want to accept” The current currency, according to Professor Frank Sea of the University of South Carolina at Aiken, who studies China’s business and economy.
Experts cited lack of incentives as the main reason Lack of enthusiasm.
Martin Chorsempa, Senior Fellow of the Peterson Institute for International Economics, Focusing on China’s Financial Innovation and Technology, said:After all, industry leaders Alipay and WeChat Pay are already Hundreds of millions of users who are familiar with the service.
“The payment experience is different or better than what is already offered, so it doesn’t tend to hit most users.” He added.
Mr. Xie also added that concerns about the loss of privacy could be a factor and that “even the general public” has come to realize the scope of government power.
Changes in spending patterns
According to the Foundation for Defense of Democracies Singleton, governments have several options for encouraging consumers to change their spending patterns.
“Over time, the adoption of digital sources will increase to pay certain costs, such as utility bills, transportation costs, and other government-managed invoices, simply because the government can force consumers to make these changes. It’s possible, “he said.
Analysts also raised the possibility that the government would require privately owned apps to actively promote the state-sponsored renminbi. It’s already starting to happen: Alipay has started Last year, it was trying to pay for digital yuan, and Tencent announced earlier this month that it would also start supporting digital yuan with its WeChat Pay wallet.
Kimmo Soramäki, Founder and CEO of London-based analytics firm Financial Network Analytics, said:
“Deploying future versions of AliPay and WeChat Pay [is] Singleton added that the government wants digital yuan to “overtake these other payment systems” due to regulatory hurdles.
However, Beijing will eventually secure widespread adoption of state-sponsored digital currencies. There seems to be at least one certainty. The Beijing Winter Olympics are not becoming the stage for digital yuan bragging rights that authorities may have hoped for.
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