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China digital currency
BusinessBanking & Finance

Blockchain ambitions: will China get the first-mover advantage with the wide adoption of the digital yuan?

  • China has moved deliberately to secure first-mover advantage in what it believes is the future of the internet
  • If the digital yuan is Beijing’s tender for the digital frontier, its blockchain initiative is its bid to build the railroads

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A visitor applying to access the digital Chinese yuan (e-CNY) at the first China International Consumer Products Expo in the Hainan provincial capital of Haikou on May 8, 2021. Photo: Xinhua
Forkast.News

In the first instalment of a three-part series produced with support from the Judith Neilson Institute for Journalism and Ideas, Forkast.News looks at China’s twin ambitions to launch a digital yuan and the next generation of the internet. Parts two and three will be published on June 29 and 30th.

There is no stage bigger than the Olympics, for the athletes and the host country. Modern China announced its arrival 13 years ago when 2,008 synchronised drummers wowed the world at the Beijing Summer Olympics opening ceremonies.
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In February, China is expected to use the Beijing Winter Olympics to unveil a home-grown marvel of intense international interest: the digital yuan, the first major central bank digital currency, or CBDC.

Consumers are unlikely to notice much difference shopping with e-CNY, as the currency is officially known. It will be worth the same as cash and will activate with a tap, swipe or QR code. But the questions this form of money raises are profound. How will state-sponsored digital money affect China’s economy, its trading relationships and – most weighty of all – the future of the global financial system now dominated by the United States and the dollar?
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“The question is not whether China’s CBDC will upend the current rules of global trade and commerce,” said Pauline Loong, director of Hong Kong-based research consultancy Asia-Analytica. “The only question is how far-reaching the ramifications will be across issues related to who controls access to capital and its movements.”

04:35

Blockchain in Asia: China Bets on Blockchain

Blockchain in Asia: China Bets on Blockchain

But for all of the digital yuan’s consequences, it is a toe peeking out from a giant red curtain. Behind is an ambitious and largely invisible infrastructure programme to rewire the country and its economy with distributed ledger technology known as blockchain. China has moved deliberately to secure first-mover advantage in what it believes is the future of the internet.

SCMP Series
Blockchain ambitions
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