China’s quest to cement its position as a global leader in digital finance is seeing the southeastern region of Guangxi Zhuang pioneer the use of the nation’s Central Bank Digital Currency (CBDC), the e-yuan, in trade with Southeast Asian countries.
This latest development emphasizes China’s strategic drive to widen the scope of its CBDC on a global scale.
Accelerating the e-yuan influence
Guangxi Zhuang, an autonomous region sharing its border with Vietnam, has committed to implementing nine national functions and piloting eight local scenarios with the e-CNY.
Among these scenarios is the usage of the digital currency at the annual China-ASEAN Expo this September and within the region’s free-trade zones.
The province, in conjunction with the People’s Bank of China’s Nanning branch, is working closely to expedite this CBDC implementation.
While China has not yet disclosed a specific timeline for a full-fledged rollout of the digital yuan, preliminary trials are ongoing in 26 major cities, including Beijing, Shenzhen, Chengdu, and Guangxi’s capital, Nanning.
China’s trials and tests of the e-yuan since 2020 have propelled the country to the forefront of launching a fully state-backed digital currency. The nation, already a global leader in digital payment systems, views the CBDC as a natural progression.
Nanning alone has seen the initiation of 430,000 e-yuan wallets and over 173,100 local merchants enrolling in a pilot scheme since December. The total value of transactions via the e-yuan in the city reached 402 million yuan (US$57.7 million) by April’s end.
Bridging economic cooperation with ASEAN
The expansive use of the e-yuan, domestically and internationally, aligns with China’s overarching goals to circumnavigate potential Western sanctions and gradually erode the US dollar’s global hegemony in trade settlements.
In this regard, Guangxi is viewed as a significant region in bolstering economic and trade ties with the Association of Southeast Asian Nations (ASEAN). China’s largest trading partner, ASEAN, saw a 15% rise in the total value of trade to US$185.2 billion in the first four months of this year.
Guangxi aspires to become a “bridgehead” for digital yuan settlements in bilateral trade. The region is poised to leverage the e-yuan, facilitating smoother, quicker trade transactions.
The future of the yuan as a regional anchor currency in ASEAN appears promising, with 4.8 trillion yuan worth of cross-border business being settled in China’s currency in 2021, marking a 16% rise year on year.
Following Brazil and Argentina’s recent embrace of the yuan, Thailand is reportedly in talks to use the currency more in bilateral trade and investments.
Further propelling its ambition, China is participating in the “mBridge” digital currency project in collaboration with the central banks of Thailand, Hong Kong, and the United Arab Emirates, thereby exploring the potential of cross-border digital currency transactions.
Through these efforts, China continues to extend its digital financial footprint, utilizing the e-yuan to enhance global trade and secure its position as a frontrunner in the era of digital currencies.
