China opens industrial park for digital yuan CBDC development in Shenzhen

October 16, 2023

By Sharan Kaur Phillora

On October 11, China unveiled its first industrial park set to advance the digital yuan ecosystem in the Luohu district of Shenzhen, bordering Hong Kong. This initiative underscores China’s proactive steps towards fostering its central bank digital currency (CBDC), also recognized as e-CNY.

Here’s what we know:

The establishment, initiated with nine residents, is part of a broader agenda where the district government delineated 10 initiatives to propel the digital yuan’s growth. These initiatives encompass payment solutions, smart contracts, hard wallets, and extensive promotion of digital yuan.

A unique proposition of this endeavor is the incentive program. Residents are enticed with offers like three years of free rent. Commercial establishments can avail up to 20 million yuan ($2.7 million) for setting up their operations, while startups could receive up to 50 million yuan ($6.9 million). The total governmental support earmarked for this project stands at 100 million yuan ($13.7 million), including the provision of loans at favorable rates.

Among the inaugural residents of the park are notable names like Hengbao, Wuhan Tianyu Information, and Lakala Payment. The former two are known for their payment card production, while Lakala, a Visa partner, specializes in payment processing. These entities aim to create a collaborative environment to drive innovation in the digital currency domain.

As per a statement by Wuhan Tianyu Information executive deputy director Zeng Zhaoxiang, the objective is to “achieve synergistic effects in the industrial chain and jointly promote the development of the park.”

This move is a fragment of China’s broader strategy to enhance digital yuan usage, currently under pilot testing across 26 cities. Despite having 261 million digital yuan wallets generated as of 2022, the adoption pace is perceived as tepid. However, with 5.6 million merchants already on board and a recent digital yuan app feature facilitating tourists to utilize Visa and Mastercard, a surge in adoption is anticipated, driven by both governmental push and technological advancements.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.

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