Jinan, the capital of Shandong Province in eastern China, has taken a proactive stance in promoting the use of China’s central bank digital currency (CBDC) by initiating digital yuan payments on all of its bus routes.
Initially, the city conducted a trial run of CBDC payments on two bus lines, and after a successful testing period, it has now expanded the new payment method to encompass its entire bus network.
Encouraging the use of the CBDC
According to a recent report by local media outlet Shunwang-Jinan Daily, the city of Jinan has taken significant steps towards embracing China’s central bank digital currency (CBDC) by updating its card readers and bus route software, enabling passengers to make payments using the digital yuan.
To further encourage the usage of CBDC, the city has introduced fare discounts for passengers who opt for the digital yuan payment method. As per the announcement, individuals can enjoy up to two discounted rides per day and a maximum of six discounted rides per month when paying with the digital yuan. Shunwang-Jinan Daily states that it will be 1 cent to take the bus.
This move aligns with broader efforts to promote the adoption of the digital yuan in China. In a separate development, the city of Changshu announced on April 23 that it would initiate the payment of civil servant salaries using the digital yuan.
Starting from May, personnel at all levels within public service, public institutions, and state-owned entities will receive their salaries in China’s CBDC.
The bigger picture
China’s journey towards a cashless society is nearing fruition; however, the majority of electronic transactions are currently conducted through privately owned apps like Alipay and WeChat Pay, which operate beyond direct state oversight.
However, the introduction of an official digital yuan would revolutionize this landscape, providing Beijing with an unparalleled level of insight into individuals’ spending habits and transaction details, significantly expanding the government’s knowledge about how and where money is being spent.
To push this forward, Chinese authorities exerted pressure on businesses, including major Western corporations like McDonald’s (MCD) and Nike (NKE), to facilitate the acceptance of digital yuan as a payment method during the Beijing Winter Olympics, while cities such as Beijing and Shenzhen went a step further by distributing millions of dollars worth of digital yuan directly to their residents.
Although the digital currency continues to struggle for traction, it is worth noting the timing with Biden calls China’s Xi a dictator in a fundraiser. Although Biden went on to defend this stance, the Council on Foreign Relations highlights that China arbitrarily detaining more than a million Muslims in reeducation camps.
