Despite the Chinese government’s efforts to promote the adoption of the central bank digital currency (CBDC), many workers in China are showing a lack of enthusiasm towards the digital yuan (e-CNY). A report revealed that some workers who were paid in e-CNY immediately converted the asset into fiat currency, indicating a clear preference for physical cash over the digital alternative. Workers expressed concerns about the lack of utility with the digital currency, as they were unable to deposit the funds or buy financial products with the e-CNY wallet, which made cash a better alternative for them. The need to balance privacy and security has also slowed the progress of promoting the digital yuan in China, with concerns raised about the traceability of transactions and potential abuse of personal financial data.
China started trials of the digital yuan in selected cities in 2019, aiming for a nationwide rollout amidst global competition to establish a state-backed digital currency. Despite processing over $250 billion in transactions using the digital yuan as of mid-2023, concerns about privacy and surveillance persist. Traditional cash allows for anonymous transactions, while the digital yuan is traceable, giving the government visibility into individuals’ financial activities. A top Chinese law firm analyzed the anti-money laundering challenges posed by the digital yuan, highlighting the cross-border nature of digital currency transactions that can complicate traditional AML monitoring methods. Despite these challenges, over 15 million e-CNY wallets were newly created by individuals in 2023, with an additional creation of 1.3 million wallets by business entities, showing some level of adoption of the digital currency.
Workers in the Chinese civil service shared their thoughts on the use of the CBDC, with some expressing a lack of utility and preference for physical cash. Despite the slow uptake of the digital yuan, China has actively promoted the currency since the trials began in 2019, with no specific timeline announced for the national launch. The digital yuan is now utilized in various public services, including tax and social security payments, in addition to personal expenditures. The lack of privacy with the digital yuan continues to raise concerns about surveillance and the potential abuse of personal financial data, contributing to the skepticism surrounding CBDCs in China. The boundaries between information tracking and information security protection need more deliberation to address the concerns raised by workers and individuals regarding the use of the digital yuan in daily transactions.
The Industrial and Commercial Bank of China, the world’s largest bank by total assets, reported that over 15 million e-CNY wallets were newly created by individuals in 2023, with an additional 1.3 million wallets created by business entities. Over 2.7 million businesses also joined the list of those accepting the digital currency, showing some level of adoption and use of the digital yuan in transactions. Despite these numbers, concerns about privacy, surveillance, and the lack of utility with the digital currency persist among Chinese workers, leading to the immediate conversion of e-CNY into physical cash. The slow uptake of the digital yuan in China reflects a broader skepticism towards CBDCs, as individuals weigh the benefits and challenges of using a digital alternative to traditional cash. The Chinese government’s efforts to promote the adoption of the digital yuan continue, with ongoing trials and promotions to encourage the use of the CBDC in various sectors of the economy and in public services.
