In brief
- 11 gas stations in Chinese tech hub Shenzhen now accept the digital Yuan as part of a broader pilot.
- Payments can be made using a mobile application without the need for an internet connection.
- Feedback has been promising so far.
Eleven gas stations in Chinese tech hub Shenzen are now accepting the digital yuan, China’s upcoming Central Bank Digital Currency (CBDC), days after citizens received over $1.5 million in the currency as part of an ongoing pilot, local news outlet Economic Information Daily reported.
The tests are being conducted by state agency Guangdong Petroleum, which launched the pilot on October 13 this week. To pay, citizens can scan a unique QR code available at the gas stations—similar to how commercial payment apps like Apple Pay work.
Feedback has been positive so far, with citizens noting the transaction experience is seamless and only “takes a few seconds” to complete. The payment facility is available for all services, from refueling to the purchase of any retail items at gas station kiosks.
To make the service more accessible to all users, the digital yuan application utilizes a “dual offline” technology, meaning as long as the mobile phone has electricity (without the need for a phone signal,) users can complete any payments. This is different from the current system used by cashless payment apps like WeChat, which require an internet connection to operate and even charge transaction fees.
China's digital yuan is looking to bite into Alibaba dominance
According to a Financial Times report Tuesday, the digital yuan will cut into the outsized roles held by Alibaba, Tencent, and others, in China’s financial economy. People familiar with the “thinking” of China’s central bank, the People’s Bank of China, said it intends to simplify digital payments and inter-bank settlements in the country while increasing domestic usage. So far, private players lead in this regard, and it’s a big pie too: Alipay oversaw over 55% of China’s $19 trillion mobile p...
Guangdong Petroleum said the digital yuan payment application will be further extended to more than 110 self-operated gas stations in Shenzhen within this month, as per the report.
The development is yet another milestone for China’s digital Yuan project, officially the Digital Currency Electronic Payment (DCEP). It’s part of the country’s ambitious Five-Year-Plan, which prominently features the development and deployment of newer technologies such as blockchain and artificial intelligence.
China Moves Away From US Dollar Ahead of Digital Yuan
China is likely to reduce its holdings of US Treasury bonds to just under $800 billion from the current level of more than $1 trillion, according to local news outlet Global Times. A major reason for the reduced exposure is the record amounts of US dollars being printed by the country’s Federal Reserve, leading to fears among investors and central banks of imminent inflation. Another is US President Donald Trump’s repeated attacks on the Chinese administration, the report said. Currently, China...
The Chinese Parliament had stated in 2019 that it expected the digital Yuan to be completed and fully launched before the 2022 Winter Olympics in Beijing. Then in September 2020, China said it will position its DCEP as a viable alternation to reduce its dependence on the US Dollar.
A plan that is full steam ahead.
