SOURCE / ECONOMY
From high-speed toll stations to WeChat mini programs, China accelerates push for digital yuan use
Published: May 07, 2023 07:52 PM
Visitors use digital yuan for payment at the 6th Digital China Summit in East China's Fuzhou, Fujian Province on April 26, 2023. Photo: VCG

Visitors use digital yuan for payment at the 6th Digital China Summit in East China's Fuzhou, Fujian Province on April 26, 2023. Photo: VCG


From highway toll stations to WeChat mini-programs, China is accelerating the push for digital yuan use by launching more application scenarios for the digital currency. The move will further drive the use of digital yuan, ramp up the amount of transactions and nurture the habit of daily users, experts said.

On Saturday, the first batch of 10 digital yuan toll stations on the Qingdao Expressway, East China's Shandong Province, was launched. The operation of the payment is similar to the broadly-used Alipay and WeChat Pay. At the exit of each toll station, drivers only need to have the QR code from their e-CNY app swiped to complete a payment.

The move marks one of the latest examples of how the digital yuan can integrate into people's daily lives, as the authorities is arranging more digital yuan scenarios in catering, shopping, leisure and entertainment sectors as well as cross-border trade settlement, in order to boost the use of the currency.

Chinese tech giant Tencent has recently incorporated the digital yuan in its WeChat mini-programs to boost the usage and popularity of digital yuan.

E-CNY payment

WeChat users can use digital yuan at merchants under their WeChat video accounts and mini programs by activating the "WeChat Payment" under the e-CNY app.

At present, the merchants using WeChat mini-programs that support digital yuan payment includes KFC, Watsons, JD.com, China Telecom, State Grid among others, WeChat said in a statement sent to the Global Times on Sunday.

Wang Peng, a research fellow at the Beijing Academy of Social Sciences, told the Global Times on Sunday that the cooperation with the domestic third-party payment platforms such as Wechat, which has a good user base and high popularity, enables digital yuan to further expand its application scenarios and enable more people to use the new payment.

Liu Dingding, a veteran internet industry analyst, told the Global Times on Sunday that adding more scenarios will further drive the use of digital yuan, which will eventually increase the amount of transactions and cultivate the habits of users.

By the end of 2022, total sum of digital yuan in circulation stood at 13.61 billion yuan ($1.96 billion), according to the People's Bank of China, the central bank. 

Increasing popularity 

The popularity of digital yuan is in particular reflected in the consumption sector. A number of special consumption-sector promotion activities are launched in the form of digital yuan which has fueled the currency's usage in holidays.

During the 5-day May Day holidays from April 29-May 3, East China's Jiangsu Province issued a total of 170 million yuan in consumer coupons and 55 million yuan red-envelopes in the form of digital yuan. And, Dapeng New District in South China's Shenzhen city also issued one million digital yuan red envelopes.

According to Chinese food delivery company Meituan, during this year's Spring Festival holidays, the number of digital yuan transaction orders seen on the platform increased by nearly four times compared with the same period last year, the number of digital yuan users increased by more than five times year-on-year, and the amount of digital transactions was up by 6.2 times year-on-year. 

Since early 2022, the governments of e-CNY testing regions have carried out about 50 digital yuan use promotional activities which have strongly promoted the recovery of retail consumption in those regions, according to Chinese media reports. 

However the total usage rate of digital yuan is still low, compared with transaction volume and market popularity of the third- party payment platforms, experts said.

According to a research report on the use and promotion of digital yuan, only 11.5 percent of people use digital yuan every day, and 54.1 percent of people use digital yuan only for red envelopes or to obtain consumption coupons.

Comparing with third-party payment methods like Alipay and WeChat Pay, currently there are less people knowing or using digital yuan as a viable way for payment, because of their using habits formed over the past many years, so there is a need for more incentives to promote its wide usage, Wang said.

For example, users may receive some discounts if they use digital yuan to pay for gas, electricity, water bills, student tuitions or other usages, Wang noted.

More use scenarios 

In addition to consumption, Chinese experts expect the use of digital yuan to expand to more market entities, be incorporated into various types of business and covering higher amount of payments.

Regional governments are seen accelerating the use of the digital yuan in public services payment, financial lending, cross-border payment, medical care services and insurance claims.

For example, Suzhou city in East China's Jiangsu Province in April launched the country's first digital yuan scenario to pay housing provident fund for designated employees; Changshu, also in East China's Jiangsu, start to pay public-sector workers in digital yuan in May. Last year, Postal Savings Bank of China completed its first auto consumption loan in digital yuan.

To accelerate the wide use of the digital yuan, a number of Chinese localities have started using e-CNY to pay the monthly salary of civil servants. 

For example, employees working for government departments, state-owned units in Changshu city will be paid in digital yuan starting May 1, according to a notice released by the local government in April.

More government supportive policies are on the way. For example, South China's Shenzhen city proposed to further cooperate with neighboring Hong Kong Special Administrative Region to try out cross-border trade payment in digital yuan.

East China's Jiangsu Province said the province will build more innovative digital yuan usage scenarios; And, East China's Zhejiang Province proposed that in 2023 the digital yuan use ecology and industrial use ecology should be further fortified.

Digital yuan offers a new, safer and more reliable payment for ordinary users, which also makes it easier for companies to trade bulk commodities that involve a large sum of money and the payment is safer and more cost-effective, Wang said.