Lin Min linmin67@hotmail.com PEOPLE in Shenzhen registered over the weekend for a lucky draw to grab 200-yuan (US$30) “red packets” in digital central bank currency. The 10 million yuan experiment, funded by the Luohu District Government, marks an important step forward in the real-life applications of the digital yuan, which has not yet been officially rolled out. The 50,000 lucky draw winners will be required to spend the 200 yuan in their digital wallets at 3,389 merchants in Luohu that have been equipped with new payment devices. The trial is an innovative move to spur domestic consumption, and a routine test in the digital currency’s research and development process, according to authorities. The move is also an indication that, as a reform and opening-up forerunner, Shenzhen remains ambitious in innovations in various fields. The Central Government announced in August that China would pilot the digital renminbi in select regions across the country. On Aug. 19, Shenzhen’s monetary supervision authority revealed that the city, along with Chengdu, Suzhou and Xiongan New Area, was conducting internal testing of the digital currency. According to media reports in September, employees of China’s four largest State-owned banks in Shenzhen were using the digital currency for a limited range of purposes. Luohu’s digital currency red packet program indicates that the internal trial has gone smoothly and the general public is now involved in the experiment for the first time. China’s digital renminbi, which is a legal tender, is different from cryptocurrencies such as Bitcoin and Ethereum, and mobile payment methods such as Alipay and WeChat Pay. Cryptocurrency is a new form of digital asset based on a network that is distributed across a large number of computers and is not issued by a central bank. WeChat Pay and Alipay are two of the most popular mobile payment methods in China, and most people pay on those platforms using barcodes, or quick response codes, on their smartphones. Even when the Internet is not available, people will be able to use their smartphones to conduct digital yuan transactions, which incur no or lower cost as compared with traditional transactions via banks. While the government has promised to respect privacy associated with the use of the digital yuan, it is believed the government will be able to crack down on crimes and money laundering more efficiently as digital currency transactions can be easily tracked. While the digital yuan is intended primarily for domestic payments, it will likely be used across the border in the future. International trade and investment, as well as cross-border payments, will definitely be facilitated by the digital currency after its domestic use becomes stable and mature. The significance of the digital renminbi should also be viewed from the aspect of internationalization of the yuan. An article published last month in China Finance, a magazine run by the central bank, stressed the need for China to issue a digital currency in its push to internationalize the yuan and reduce its dependence on the global U.S. dollar-based payment system. Since the Clinton administration, the U.S. has been exploiting the pervasive U.S. dollar payment system to exercise the so-called “long-arm jurisdiction” and impose hegemonic economic and financial sanctions on other countries. For ordinary folks, the digital yuan will just be a new option to make purchases and pay bills. Given that the Chinese people have displayed the penchant for new technology and digital transformation, as seen from the ubiquitous use of mobile payments, it will be of no surprise if the digital yuan is met with a fervent embrace by the public, even though there may be some technical glitches and concerns about privacy in the initial stage of its development. (The author is a deputy editor-in-chief of Shenzhen Daily.) | 