Chinese cities along the Belt and Road Initiative promote digital RMB, with Hong Kong serving as a cross-border payment testbed

According to the South China Morning Post, China's digital yuan is once again being used to promote the Belt and Road Initiative, with Xuzhou City recently announcing plans to promote the use of digital yuan in cross-border trade. Further reading: Russia is planning to allow cryptocurrency for foreign trade settlements. Learn more about the Belt and Road Initiative news for 2023: "Belt and Road" trapping poor countries in debt.

Xuzhou Plans to Use Digital RMB in Belt and Road Trade

Xuzhou is a city in eastern China's Jiangsu province and serves as the starting point for many freight trains heading to Europe. The local government recently announced a plan to promote the use of a digital currency known as "e-CNY," including its application in cross-border trade. The Xuzhou municipal government stated that the digital RMB could be used to "support the Belt and Road Initiative," initially for paying for services and storage fees for goods transported by train, and in the future for paying taxes and utility fees in Xuzhou. Additionally, other areas in Suzhou, including Xiangcheng District, Taicang City, and Suzhou Industrial Park, have been using digital RMB to pay salaries since last year.

Changshu City to Pay Civil Servants' Salaries with Digital RMB

Another city in Jiangsu province, Changshu City, is also further promoting the use of digital RMB. According to a report by the South China Morning Post, starting next month, Changshu City, under the jurisdiction of Suzhou, will use digital RMB to pay the salaries of civil servants and employees of public institutions. This is another example of the further promotion of digital RMB in Jiangsu province.

Hong Kong Becomes Testing Ground for Cross-Border Payments with Digital RMB

Over the weekend, the Hong Kong Monetary Authority (HKMA) announced that the Guangdong-Hong Kong-Macao Greater Bay Area will be a testing ground for cross-border payments using digital RMB.

HKMA Deputy Chief Executive Eddie Yue stated at a financial forum that HKMA is collaborating with the People's Bank of China to test digital RMB as a cross-border payment tool. Shenzhen has been offering shopping discounts to Hong Kong tourists using e-CNY since February this year, and in December last year, Bank of China (Hong Kong) provided cash rewards to registered customers using digital RMB.

In addition, Yue mentioned that monetary authorities from mainland China, Hong Kong, and two other countries are exploring the use of China's central bank digital currency (CBDC) to "enhance the efficiency and reduce the cost of cross-border transactions." The project involved Thailand and the United Arab Emirates and completed a 40-day trial in September 2022, with a total transaction amount exceeding 150 million RMB (approximately 22 million USD) involving 20 commercial banks.

The promotion of digital RMB in China began in 2014, with the first trials starting in 2019 in pilot cities such as Shenzhen, Suzhou, Xiong'an New Area, and Chengdu. Currently, digital RMB is being promoted in 26 cities and regions across 17 provinces in China. According to the latest data from the People's Bank of China, the total circulation of digital RMB is expected to reach 13.6 billion RMB by the end of 2022. In the promotion process in Jiangsu province, cities like Xuzhou and Changshu are actively promoting the application of digital RMB, while Hong Kong is set to become a testing ground for cross-border payments, further advancing the international application of digital RMB.