Key takeaways:
- Numerous pilot projects for the digital yuan, China’s pilot CBDC is part of a modernization plan for Shanghai’s Pudong New Area.
- As per the plan, Pudong New Area would receive additional authority to transform into a global center.
Numerous pilot projects for the digital yuan, China’s pilot central bank digital currency (CBDC), as well as a plethora of new foreign trade facilities, are part of a modernization plan for Shanghai’s Pudong New Area.
The Chinese Communist Party Central Committee and the General Office of the State Council have released an ambitious five-year plan, which is detailed in a document released by the state-run Xinhua News Agency.
As per the plan, Pudong New Area would receive additional authority to transform into a global center. It will have “convenient” customs procedures along with an international standard-compliant business mediation system.
The freer flow of commodities through recently constructed port facilities, neighboring free trade zones, and Shanghai Pudong International Airport will be facilitated by improved supply chain management.
For research and development, newly established educational institutions will be granted specific intellectual property rights. According to the proposal, under a unique visa regime, top-notch medical and educational facilities will draw in international talent from nations that are partners in China’s Belt & Road Initiative.
It is said that these developments will offer a dynamic foundation for new uses of the digital yuan, also known as the digital renminbi. The following imperatives are part of the plan:
“Pilot the use of digital renminbi in trade settlement, e-commerce payment, carbon trading, green power trading and other fields, and standardize and expand the application scenarios of digital renminbi in the use of fiscal funds.”
As per the paper, remarkable advancements in institutional innovation will be made by 2027, and noteworthy outcomes in the development of a new, high-standard open economic system and a market system will be attained.
China is creating digital yuan use cases at a rapid pace. Integrations have been established with multiple foreign banks. For instance, it has transacted in gold and petroleum on Shanghai exchanges using the digital yuan.
The Chinese government, in the meantime, has stepped up its crackdown on cryptocurrencies this year and has cautioned people against using Tether and other stablecoins. China has also outlawed cryptocurrency mining. There have been some quite severe actions taken against cryptocurrency miners.
Politicians in the US have responded angrily to the Chinese CBDC. Senator Rick Scott’s introduction of the Chinese CBDC Prohibition Act in November marked the most recent attempt in the US Congress to thwart the advancement of the digital yuan.
