China’s CBDC struggles amid slow adoption

The Epoch Times, a US-based media outlet critical of the Chinese Communist Party (CCP), has declared China’s digital yuan project a failure. The publication links this claim to the downfall of Yao Qian, the former head of the Digital Currency Research Institute, who was recently expelled from the CCP over corruption allegations. Yao’s dismissal, coupled with slowing developments, has raised doubts about the future of the central bank digital currency (CBDC).

Since its launch in 2014, the digital yuan has been heavily promoted by President Xi Jinping as a transformative payment tool. However, public adoption has reportedly been slow, with surveys suggesting 90% of respondents have never encountered the digital currency. Recent CCP messaging has downplayed its role, rebranding the digital yuan as a supplementary payment method rather than a revolutionary system, which critics have interpreted as an admission of failure.

Despite these challenges, some regions, such as Shanghai, are continuing efforts to promote the currency’s use. On the international stage, the BRICS bloc may offer new opportunities for the digital yuan. Recent discussions in Kazan highlighted plans for a shared CBDC system to facilitate cross-border payments, potentially linking the digital yuan with Russia’s upcoming digital rouble and other BRICS currencies.

China’s efforts to internationalise the digital yuan through initiatives like the Belt and Road Initiative and the Regional Comprehensive Economic Partnership suggest the project is far from abandoned. However, its future success may hinge on overcoming domestic scepticism and finding stronger global partnerships.