In a major move to promote digital currency adoption, public sector employees in an eastern Chinese city will be paid entirely in digital yuan. According to an official document widely shared on government websites, Changshu, located in the province of Jiangsu, will implement this payment method starting in May. State media reports that this marks the largest rollout of China’s digital currency, known as the e-CNY, in the country thus far.
The new payment system will affect government employees, as well as staff at state-owned companies and public institutions such as schools, hospitals, libraries, research institutes, and media organizations within Changshu. The city, which has a population of 1.7 million, has been conducting digital yuan experiments since earlier, having already utilized it for transit subsidies of certain government employees since October.
The digital yuan, which exists solely in the online realm and is managed and backed by China’s central bank, incorporates elements of blockchain technology, similar to cryptocurrencies. Each transaction is recorded and traceable in a digital ledger.
China has been testing the digital yuan in various cities since 2020, positioning itself to lead the global race in developing a state-backed digital currency, also known as a central bank digital currency (CBDC). While the timeline for a nationwide launch has not been announced, Beijing has made efforts to promote the currency.
It released a wallet app last year that can be used in pilot cities and regions, pressured businesses like McDonald’s and Nike to accept digital yuan during the Beijing Winter Olympics, and distributed millions of dollars’ worth of digital yuan to residents in selected cities. Privately-owned apps such as Alipay and WeChat Pay have also been encouraged to support digital yuan payments.
Analysts have pointed out concerns regarding the government’s control and a lack of incentives as contributing factors to the digital yuan’s limited traction. Established industry leaders like Alipay and WeChat Pay already boast hundreds of millions of users who are familiar with their services.