China is planning on rolling out $6.2 million in digital currency to citizens in Beijing in a lottery.
According to the Beijing Local Financial Supervision and Administration Bureau, Citizens living in the capital can use two banking apps to apply to win one of the 200,000 so-called red packets as part of the lottery.
This is not the first time the country is testing its digital currency. In October 2020, Shenzhen, a southern city known for its progressive economic policies, rolled out 10 million Yuan worth of digital currency to 500,000 residents, who could then utilize the money to shop at certain online and offline retailers. Similarly, in February, the southwestern Chinese city of Chengdu handed out 40.2 million Yuan of digital currency.
Given these trials, it is evident that China is not ready to do a nationwide rollout of the digital Yuan, which it has been developing since 2014. According to Li Bo, deputy governor of the People's Bank of China (PBOC), "the central bank would expand the scope of its pilot projects and could even allow foreign visitors at the 2022 Beijing Winter Olympics to use it."
It is important to note that the digital Yuan is not a cryptocurrency like bitcoin. While bitcoin is decentralized, the digital Yuan is issued by a central authority. According to CNBC, "China's efforts are an example of a central bank digital currency (CBDC), and the PBOC is aiming to digitalize banknotes and coins in circulation."
The launch of China's digital Yuan has been widely seen as a threat to the U.S. dollar, the standard for international trade and the world's reserve currency, given that the digital Yuan could be used for international trade. However, "PBOC Deputy Governor Li reiterated the digital Yuan was for domestic use and not and attempt to challenge the dominance of the U.S. dollar." CNBC
"For the internationalization of the renminbi, we have said many times that it's a natural process, and our goal is not to replace (the) U.S. dollar or any other international currency. I think our goal is to allow the market to choose and to facilitate international trade and investment." Li Bo
China in focus
GDP: $14.28 trillion compared to US $21.433 trillion in 2019
Population: 1.398 billion compared to US 328,239,523 in 2019
GDP per capita: $10,216 compared to US $65,297 in 2019