China’s E-Yuan Trade Push in Guangxi Brings Digital Currency Closer to Asean Settlements

  • Use of China’s central bank digital currency, also known as the e-CNY, continues to expand, and the latest move could help internationalize the yuan
  • Advancing the e-yuan’s use abroad could help China bypass Western sanctions like those imposed on Russia, while undercutting the US dollar’s global dominance in trade

A southern Chinese region has pledged to become a pioneering zone for using the e-yuan in trade with Southeast Asian countries – the latest sign of Beijing’s ambitions to internationalise its central bank digital currency.

The Guangxi Zhuang autonomous region, which borders Vietnam, will implement nine nationwide functions for the use of China’s digital currency, also known as the e-CNY, and will pilot eight locally unique scenarios. These include using the e-yuan at the annual China-Asean Expo in September, and in business dealings within the region’s free-trade zones and in border trade, according to the Nanning branch of the People’s Bank of China.

While China has yet to announce a timetable for the official and widespread launch of its digital yuan, trials involving the sovereign digital currency have been carried out in 26 cities nationwide cities, including Beijing, Shenzhen and Chengdu, as well as two Guangxi cities – its capital Nanning and the port city of Fangchenggang.

The central bank branch has already started conducting joint research with local authorities to roll out the implementation quickly, state media China News Service reported, without revealing a timetable.

The extent of China’s e-yuan tests since 2020 has made the country a global front runner in rolling out a fully state-backed digital currency. It has been a natural development, as China is the world leader in digital payment systems.

Nanning alone has seen the opening of 430,000 e-yuan wallets, and the joining of 173,100 local merchants, since its inclusion in a pilot scheme in December, local data showed. And the accumulated value of its transactions had reached 402 million yuan (US$57.7 million) by the end of April.

Advancing the e-yuan’s use at home and abroad, such as by facilitating yuan-denominated bilateral trade and investment, plays into central authorities’ goals of bypassing potential Western sanctions like those imposed on Russia, while gradually cutting into the US dollar’s global dominance in trade settlements.

Guangxi is seen as a key region in enhancing economic and trade cooperation with the Association of Southeast Asian Nations (Asean), China’s largest trading partner, and the region aims to be a “bridgehead” for digital yuan settlements in bilateral trade.

The 10-nation bloc was the largest destination of Chinese goods in the first four months of this year, and the total value was up 15 per cent from a year earlier, to US$185.2 billion, according to customs data.

China’s central bank is working with local authorities in the Guangxi Zhuang autonomous region to broadly expand use of the nation’s burgeoning digital currency. Illustration: Reuters

A southern Chinese region has pledged to become a pioneering zone for using the e-yuan in trade with Southeast Asian countries – the latest sign of Beijing’s ambitions to internationalise its central bank digital currency.

The Guangxi Zhuang autonomous region, which borders Vietnam, will implement nine nationwide functions for the use of China’s digital currency, also known as the e-CNY, and will pilot eight locally unique scenarios. These include using the e-yuan at the annual China-Asean Expo in September, and in business dealings within the region’s free-trade zones and in border trade, according to the Nanning branch of the People’s Bank of China.

While China has yet to announce a timetable for the official and widespread launch of its digital yuan, trials involving the sovereign digital currency have been carried out in 26 cities nationwide cities, including Beijing, Shenzhen and Chengdu, as well as two Guangxi cities – its capital Nanning and the port city of Fangchenggang.

The central bank branch has already started conducting joint research with local authorities to roll out the implementation quickly, state media China News Service reported, without revealing a timetable.

The extent of China’s e-yuan tests since 2020 has made the country a global front runner in rolling out a fully state-backed digital currency. It has been a natural development, as China is the world leader in digital payment systems.

Nanning alone has seen the opening of 430,000 e-yuan wallets, and the joining of 173,100 local merchants, since its inclusion in a pilot scheme in December, local data showed. And the accumulated value of its transactions had reached 402 million yuan (US$57.7 million) by the end of April.https://multimedia.scmp.com/widgets/china/yuanchart/

Advancing the e-yuan’s use at home and abroad, such as by facilitating yuan-denominated bilateral trade and investment, plays into central authorities’ goals of bypassing potential Western sanctions like those imposed on Russia, while gradually cutting into the US dollar’s global dominance in trade settlements.

Guangxi is seen as a key region in enhancing economic and trade cooperation with the Association of Southeast Asian Nations (Asean), China’s largest trading partner, and the region aims to be a “bridgehead” for digital yuan settlements in bilateral trade.

The 10-nation bloc was the largest destination of Chinese goods in the first four months of this year, and the total value was up 15 per cent from a year earlier, to US$185.2 billion, according to customs data.EVERY SATURDAYA weekly curated round-up of social, political and economic stories from China and how they impact the world. GET THE NEWSLETTERBy registering, you agree to our T&C and Privacy Policy

It was followed by US$170.7 billion for the European Union and US$158.3 billion for the United States.

Asean is widely believed to be an important region where the yuan could play a role as a regional anchor currency. About 4.8 trillion yuan worth of cross-border business, including trade and investment, was settled in China’s currency in 2021, a year-on-year rise of 16 per cent.

Following recent moves by Brazil and Argentina to embrace wider use of the yuan, Thailand has reportedly been in talks to use the yuan more in bilateral trade and investments.

Beijing has also been advancing cross-border use of the e-yuan in Hong Kong, a key offshore yuan centre.

Meanwhile, it has also joined the “mBridge” digital currency project, a collaborative scheme with the central banks of Thailand, Hong Kong and the United Arab Emirates, to experiment with cross-border transactions in digital currencies. (Source: scmp.com)

Visit HPA-China’s Information Hub, CLICK HERE