Alongside the pilot project, plans are underway to build a legal digital currency testing zone and a digital financial system.
Beijing’s Local Financial Supervision and Administration, together with the Tongzhou District Government, held a conference last Monday that highlighted the China People’s Bank’s Digital Currency Research Institute’s plans to establish a legal digital currency testing zone and a digital financial system in the Chinese capital. These measures would be included in the overall plan for the China (Beijing) Pilot Free Trade Zone.
Plans to trial the digital yuan in Beijing were already discussed last August, but the topic’s appearance at this regional conference indicates the pilot has been elevated into state-level planning, as noted in the policy document covering the pilot free trade zone in Beijing and other cities.
A report by Chinese media outlet Sina disclosed that the conference also addressed the implementation of the country’s “two districts” policy. Discussions covered more relaxed market access for foreign financial institutions, advancement of green finance and international wealth management, and the rollout of digital currency experiments.
China’s government intends the central bank digital currency (CBDC) pilot in Beijing to follow a similar model to Shenzhen’s pilot program, where authorities distributed approximately $1.5 million worth of digital currency to residents.
There have been some reports noting user dissatisfaction with the digital yuan in its current form. Although two million people applied to join the pilot that distributed 200 digital yuan (about $30), some participants described the process as less convenient and said they would not choose to use the CBDC again unless it were provided for free in another giveaway. Other applicants observed that the digital yuan’s infrastructure resembles Alipay and WeChat’s existing digital payment systems, which have long been in widespread use.
PBC Governor Yi Gang announced that digital yuan trials have completed more than four million transactions, with a cumulative value of roughly $299 million.
Proposals to expand digital currency testing to Beijing align with the implementation strategy outlined by China’s Ministry of Commerce. A Bloomberg report published last August indicated trials of the digital yuan are also likely to take place in parts of northern China such as Tianjin and Hebei province, as well as in the Yangtze River Delta city cluster, including Shanghai.