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Low Usage of China's Digital Yuan

China's digital yuan, also known as e-CNY, has seen little use since its launch two years ago, according to Xie Ping, a former official of the People's Bank of China (PBOC) and current finance professor at Tsinghua University.

China's Digital Yuan Logo
China's Digital Yuan Logo

Xie noted that cumulative e-CNY transactions had only reached $14 billion (100 billion yuan) in October, calling the results "not ideal" and stating that usage had been "low, highly inactive."

In comparison, around 903.6 million people in China use mobile payments, according to a 2021 report from China UnionPay. Despite the government's efforts to expand e-CNY trials and add new wallet features, only 261 million users have set up an e-CNY wallet, according to a January report from the PBOC.

Changing The Use Case of e-CNY Needed

To increase adoption, Xie suggested that the use case of e-CNY should be changed from its current role as a cash substitute and opened up to other uses, such as the ability to pay for financial products or being connected to more payment platforms. He compared e-CNY to third-party payment systems in China, such as WeChat Pay, Alipay, and QQ Wallet, which offer investment, lending, and loan options and "have formed a payment market structure that has met needs for daily consumption."

However, some third-party financial apps that are e-CNY compatible see little use, as Xie stated that "people are used to" using the original service and change "is difficult."

Criticism of Chinese Government Initiatives Rare From Former Officials

Xie's criticism of China's central bank digital currency (CBDC) initiative is rare from a former official and may indicate that the country is struggling to gain traction on its CBDC. The government recently expanded e-CNY trials to four new cities in December and added new features to the e-CNY wallet app to attract users in time for Chinese New Year, including the ability to send digital versions of traditional red envelopes containing money.