China is moving aggressively to co-opt frontrunner status in the development of digital currency, according to a recent report by central banking publication BIS. Expected to become the first major economy to launch a central bank digital currency (CBDC), this electronic payment system is undergoing one of the largest real-world trials in several China beginning in May 2020. China had already filed more than 120 patent applications for its official digital currency (alternately referred to as digital yuan-more than any other country.
In April of 2020, China’s central bank, the People’s Bank of China (PBOC), gave the green light to conduct hypothetical-use tests of the digital yuan in several regions – Beijing-adjacent Xiong’an New Area, Shenzhen, Suzhou, Chengdu, and the Beijing 2022 Winter Olympic Games locations.
Another confirmed city is Hong Kong. On December 4, Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue said that the PBOC and HKMA were preparing to test the use of digital yuan for cross-border payments.
In the latest digital currency trials, both Suzhou and Shenzhen are testing digital RMB apps and have recruited thousands of merchants throughout these areas to use them. Nineteen corporate players like McDonalds, Starbucks and Subway are conducting smaller tests, although initial results in these areas have been less than successful.
The private sector is keen to get involved in the DCEP test. The country’s biggest ride-hailing company Didi Chuxing, food delivery giant Meituan Dianping, and streaming platform Bilibili were reported to be joining hands with banks to explore applications of the DCEP.
JD.com, one of China’s biggest e-commerce giants, has become the country’s first virtual platform to officially accept digital yuan, according to the company’s announcement on December 5. The company’s fintech arm JD Digits will accept digital yuan as payment for some products on its online mall, as part of the December digital currency pilot program in Suzhou.