Residents in 3 major Chinese cities have begun using the country’s central bank digital currency (CBDC) — the digital yuan — to pay taxes, stamp duty, and social security premiums (e-CNY).
According to a domestic news report, a number of government agencies in Zhejiang province, which is located just south of Shanghai, are currently running real-world trial programmes in which citizens pay taxes using digital yuan.
The Zhejiang Taxation Bureau is collaborating with the People’s Bank of China (PBoC) to investigate a variety of taxation payment methods based on the digital yuan.
The PBoC and affiliated local government agencies are reportedly looking forward to the Asian Games, which will be held in Hangzhou in September, as the next major test for the digital yuan. Local governments claim that the digital yuan could be used to simplify tax-related calculations.
Following the successful implementation of the digital RMB pilot programme, which began public testing in April 2021, the PBoC announced plans to expand the programme to more Chinese cities, including Guangzhou, Tianjin, and Chongqing.
On the taxation side of the ledger, one local government has decided to “airdrop” 15 million digital yuan, or about $2.25 million at the time of writing, to its residents in the hopes of increasing consumer spending during the pandemic and promoting the use of the new currency.
Approximately 130,000 Futian district residents in Shenzhen will receive a portion of the 15 million digital yuan (e-CNY) in the form of a red envelope via the Chinese social media app, WeChat. The digital RMB airdrop is the government’s most recent attempt to increase spending in areas of China most affected by the recent COVID-19-related lockdowns.
Money is frequently given out in red packets or envelopes in Chinese and other East Asian cultures, as the color bestows good wishes and luck on the recipient.
With the majority of countries still in the research stages of CBDC implementation, these developments extend China’s already significant lead in developing a central bank digital currency for public use.
According to state media, digital yuan transactions in China totaled nearly 87.6 billion yuan by the end of 2021.
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