China's digital currency to be tested in Xiongan; trial run involves restaurants
Digital currency to be tested in Xiongan; trial run involves restaurants
Published: Apr 23, 2020 08:28 PM

File Photo: A worker counts Chinese currency renminbi banknotes at a bank in Tancheng County of Linyi City, east China's Shandong Province, April 11, 2013. Photo:Xinhua

The  project of China's official digital currency, dubbed as DC/EP, will be tested in the Xiongan New Area, North China's Hebei Province, with a trial run in local catering and retail industries including US coffee chain Starbucks, fast food chain McDonald's and the Qingfeng Baozi (stuffed bun) restaurant chain, the Global Times has learned Thursday. 

According to a document seen by the Global Times, local authorities in Xiongan new area held a roadshow for the DC/EP project on Wednesday afternoon. 

Participants include the Xiongan development and reform bureau, working teams piloting DC/EP from a subsidiary of the People's Bank of China (PBC), China's central bank, in Hebei provincial capital city of Shijiazhuang, employees from the Xiongan branches of four major commercial banks - the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank - as well as representatives from Tencent and Alipay, according to industry media reports. 

Other participants include enterprises such as Starbucks, McDonald's, Subway Restaurant, Qinfeng Baozi, Oscar Cinema, JD unmanned supermarkets, UnionPay unmanned supermarkets, and Zhonghai SPV Group, a consortium of major state-owned construction enterprises that undertake key projects in Xiongan.

As an innovation-driven city, Xiongan is accelerating its pace of overall digitalization in local governance, business operations and people's daily life, Chen Bo, director of the Finance Research Center at the Institute of Finance and Economics under the Central University of Finance and Economics, told the Global Times on Thursday.

In 2019, Xiongan placed artificial intelligence, 5G networks, and the internet of things on its development radar. 

Industry insiders say the unveiled list shows the PBC has set up a few task forces in different Chinese cities to work with local authorities in order to facilitate the progress of the DC/EP project. 

The document also implied that four commercial banks and private Chinese tech firms could be major operators of the digital currency. 

"It is plausible that employees of Zhonghai SPV may be the first to open DC/EP wallets and spend the currency in the aforementioned companies," an industry insider told the Global Times.

The Global Times reported earlier that in addition to Xiongan, three other cities - Shenzhen in South China's Guangdong Province, Suzhou in East China's Jiangsu Province, and Chengdu in Southwest China's Sichuan Province - will also test the central bank-backed digital currency. 

Some industry media reports hint DC/EP may be used for transportation subsidies in Suzhou city.

"The pilot program will test the new fintech, and, it needs some time to check its effect before it will be introduced to other cities," Chen noted.

China has recently been accelerating its pace of digital currency implementation despite the PBC advocating caution, Chen noted, adding that the digital currency technology is maturing. The COVID-19 pandemic has disrupted China's economic activities but not its plan to advance the digital currency plan. 

The major force behind the sudden advancement is growing economic slowdown pressure caused by the COVID-19 pandemic, which has largely impaired economic growth, particularly the offline retail and services sectors.

China's central bank has said the research and development work for the official digital currency is proceeding steadily. Internal pilot tests are being carried out in four cities and will be carried out in scenarios for the 2022 Winter Olympic Games in Beijing.

In March, experts at China's National Development and Reform Commission, the country's economic planner, suggested the PBC may ramp up its DC/EP implementation after the virus subsides, as it may become a stimulus package to offset the economic downturn.

The world's other central banks have been racing to roll out their own digital currencies, yet the pandemic has curtailed their paces.