What China’s citizens really think of its digital currency
Following years of rumors and speculation, China’s digital yuan has officially rolled out in parts of China for pilot tests, with government mouthpiece People’s Daily recently publishing a story introducing the DCEP system.
Cities taking part in the pilot include Shenzhen, Suzhou, Xiong’an New Area and Chengdu, where people with accounts at major state-owned banks such as the Agricultural Bank of China can create a Digital Currency Electronic Payment (DCEP) wallet in their bank’s mobile app.
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The app’s functions include digital currency exchange, wallet management and transaction records as well as basic payment receiving and collecting.
But in a country that already eschews cash in favor of mobile payments through the likes of Alipay and WeChat Pay, how much will an e-RMB really matter to the average Chinese person, the laobaixing?
How will the DCEP affect Chinese citizens?
To find out, Forkast talked to Chinese citizens from across the country.
“[The DCEP] will further enhance the current cashless society while maintaining the status of cash in a cryptocurrency format,” said Lim Wei Ming, resident manager at the Shangri-La hotel chain in Shenzhen.
A content manager at one of China’s largest Internet companies said she is already accustomed to making payments by WeChat Pay, so she likely will not change that habit.
“But it depends on how DCEP will promote itself in the future,” said Zhang Fan, who lives in Beijing and declined to identify her employer.
How does the DCEP work?
The DCEP will function both as legal tender and electronic payment. Like physical cash—and unlike debit cards or a private digital pay system like Apple Pay—retailers will eventually not be allowed to refuse it. Although China’s digital yuan doesn’t incorporate the decentralized elements of blockchain technology, it does make use of smart contracts, cryptography and tracking to enhance anti-money laundering efforts and combat tax evasion.
Because it would be state issued and controlled, central bank digital currencies (CBDC) like the DCEP would respond much more to monetary policies than credit cards or cryptocurrencies like Bitcoin that are independent of the government. The digitization of cash can also help governments keep tighter control over money in circulation, known as M0, which otherwise is harder for central banks to track.
Economists say the digital yuan would also give the PBOC, China’s central bank, greater ability to change interest rates to spur consumption. Increased consumption is one of China’s goals set out in its 13th Five Year Plan, which lays out long term economic strategies up to 2020.
China is already a cashless society
In China, mobile payments through apps like Tencent’s WeChat Pay and Alibaba’s Alipay are already in wide use, with most people using their mobile phones to scan a QR code at points of sale. Indeed, cash is so rarely used that even street beggars in China use printed QR codes to receive handouts. Credit cards have also fallen out of favor, since they require stores to set up processing infrastructure and charge high fees for transactions.
In China, cashless has been a way of life after Alipay and WeChat Pay toppled the use of cash and credit cards
– Lim Wei Ming
“In China, cashless has been a way of life after Alipay and WeChat Pay toppled the use of cash and credit cards,” said Lim, the hotel manager. “Chinese people will endorse and not detest [the DCEP].”
Video game store owner Da Lin hasn’t used any cash at his Shenzhen store, located in a busy electronics shopping district, for the past three years. “For businesses like ours, I actually want no cash because it is simpler,” he told Forkast.News. “Now almost no one goes out with cash.”
As for China’s new digital currency, Lin’s reaction is essentially a shrug.
“If the payment method is the same, the digital renminbi is just one more payment method.”
“[The DCEP] doesn’t matter for us for better or worse… because now WeChat, Alipay or other payment methods have basically covered all aspects of our lives, ” Lin said. “If the payment method is the same, the digital renminbi is just one more payment method.”
The DCEP’s unique features
The DCEP offers features that current digital payment systems don’t have, such as “double off-line transactions,” which allow users to transfer and receive the e-RMB directly to and from each other without having to go through the Internet or mobile networks.
“There is a small chance that Tencent or Alipay may fail the next day, which also favors the DCEP a bit,” Zhiguo He, a professor of finance at the University of Chicago Booth School of Business, told Forkast.News. But he added that such a scenario—involving corporate behemoths that have been described as the Amazon and Facebook of China—is unlikely.
According to Decrypt