China’s digital yuan adoption faces ‘bottlenecks,’ says director of Shanghai-based university

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As a seasoned investor with a keen interest in both traditional and digital currencies, I find myself closely watching China’s digital yuan adoption strategy unfold. With my roots deeply entrenched in Asia, I have witnessed firsthand the dominance of payment platforms like Alipay and WeChat Pay.

According to Charles Chang, a director at a Shanghai-based institution of higher learning, the implementation of China’s digital yuan is encountering obstacles because users are hesitant and existing platforms such as Alipay pose strong competition.

The digital version of China’s central bank currency, often referred to as the digital yuan, is facing hurdles in gaining user acceptance due to hesitance and competition from services such as Alipay, according to Charles Chang, director of the Fintech Research Centre at Fudan University in Shanghai.

Even though the digital yuan holds promise, established online payment platforms like Alipay and WeChat Pay already have large numbers of users, creating challenges in convincing people to adopt a different payment method, as Chang pointed out in an interview with the South China Morning Post on December 1st.

According to recent reports from crypto.news, it’s worth noting that despite the presence of approximately 185 non-bank payment institutions within the country, WeChat Pay and Alipay (owned by Ant Group) remain dominant forces in China’s mobile payment landscape.

Chang admitted that Beijing is facing “some bottlenecks in adopting the digital yuan today,” but suggested the push for the state-run digital currency will continue, despite corruption accusations against Yao Qian, the former head of the People’s Bank of China’s digital currency institute.

The digital yuan, initially rolled out in certain cities last year, represents China’s ambitious endeavor to take a leading role globally in central bank digital currencies. As of now, the People’s Bank of China has expanded the trial phase to 26 regions across 17 provinces; however, there is no announced date for a nationwide debut.

By June this year, the total value of transactions conducted using the digital yuan had surpassed 7 trillion yuan, approximately equivalent to $968 billion. This figure represents a substantial rise compared to the previous year. However, scholars like Chen Zhiwu, a finance professor at the University of Hong Kong, caution that the digital yuan may not be able to escape the inherent constraints that affect the appeal of the yuan.

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2024-12-02 12:19