Despite the Chinese government’s efforts to promote the adoption of the digital yuan, many workers in China are showing a lack of enthusiasm towards the central bank digital currency (CBDC). According to a report, some workers who received their salaries in digital yuan converted the asset into fiat currency immediately after they were paid, indicating a clear preference for physical cash over the digital alternative. Workers in the Chinese civil service also expressed their thoughts on the use of the CBDC, with some highlighting the lack of utility and limited use cases for the digital currency as reasons for cashing out.
Ye Dongyan, a researcher at the Cheung Kong Graduate School of Business in Beijing, emphasized the need to balance privacy and security when it comes to the digital yuan, which has slowed its progress in adoption. The report surveyed responses from local workers and detailed the reasons behind China’s slow uptake of the digital currency, with concerns raised about information tracking and information security protection with the digital yuan. Despite starting trials of the digital yuan in selected cities in 2019, China has faced skepticism and hesitation from workers, especially in the civil service sector, regarding the use of the CBDC in their daily transactions.
Yi Gang, the former governor of the People’s Bank of China, reported that over $250 billion in transactions were processed using the digital yuan as of mid-2023. While this indicates substantial volumes, privacy remains a major issue as digital yuan transactions are traceable, unlike traditional cash that allows for anonymous transactions. The lack of privacy raises concerns about surveillance and the potential abuse of personal financial data. Additionally, a top Chinese law firm analyzed the anti-money laundering (AML) challenges posed by the digital yuan, highlighting the cross-border nature of digital currency transactions that can complicate traditional AML monitoring methods.
Despite the skepticism and concerns surrounding the digital yuan, the Industrial and Commercial Bank of China reported in its annual report that over 15 million e-CNY wallets were newly created by individuals in 2023, with an additional creation of 1.3 million wallets by business entities. Over 2.7 million businesses also joined the list of those accepting the digital currency. In Suzhou, China, over 29.16 million digital yuan wallets have been opened, with individuals and firms transacting over $416,811,390,000 worth of CBDC in 2023. The digital yuan is now utilized in various public services, including tax and social security payments, in addition to personal expenditures, indicating some level of acceptance and adoption of the digital currency.
Despite the progress made in terms of adoption and transaction volumes, concerns around privacy, security, and limited utility continue to hinder the widespread use of the digital yuan. Workers in China, especially in the civil service sector, have shown a preference for physical cash over the digital alternative, citing the lack of use cases and limited options for utilizing the digital currency as reasons for cashing out immediately after receiving their salaries. The Chinese government, however, remains committed to promoting the adoption of the digital yuan, with trials started in selected cities in 2019 and ongoing efforts to establish a nationwide rollout amidst global competition in the realm of state-backed digital currencies.
