China’s Communist Party sets ambitious goals for the digital yuan in 2023

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Officials of the Chinese Communist Party (CCP) in Suzhou are eyeing a massive usage spike of the digital yuan in 2023 after unveiling several growth-focused initiatives.

Local news outlet JS China reported that CCP officials are looking at achieving a transaction volume of $300 billion before the end of the year in Suzhou. The city, nestled in the Jiangsu province, has been a key city in the People’s Bank of China (PBoC) digital yuan pilot since early 2022.

Party officials have also set a Key Performance Indicator (KPI) of processing $30 billion worth of loans in digital yuan for SMEs. In 2022, digital yuan usage Suzhou totaled $50 billion, while PBoC data revealed that little over 30.54 million individuals downloaded the central bank digital currency (CBDC) wallet.

Only $2.78 billion were issued as loans to Suzhou’s small businesses through the digital yuan in 2022, while other incentives for SMEs amounted to nearly $6 billion.

“By 2025, the People’s Bank of China’s digital assets data monitoring platform, finance and commodities blockchain-powered exchange, Internet of Things payment solution, and fintech lab will have produced tangible results. This would incentivize the development of the digital finance ecosystem and synergize well with the existing financial sector within the City of Suzhou,” the city’s plan read.

Party officials have directed local authorities to implement the new KPI by creating a healthy environment for the CBDC to thrive ahead of a full-scale launch. Local authorities are also expected to foster the growth of 1,000 fintech firms in the city leveraging AI, distributed ledger technology, and machine learning.

In January, Suzhou-based Soochow Securities became the first firm to leverage the digital yuan in securities trading, to the delight of party officials.

A flurry of developments for the CBDC

The PBoC is marching toward a full-scale launch for the digital yuan, a move that has filled enthusiasts with unbridled optimism. Ahead of the launch, the PBoC has continued to add new features to the wallet, with the latest being the ability for customers to send red packets in line with Chinese New Year traditions.

The central bank added the metrics from the CBDC usage in its annual financial statement, indicating that digital yuan transactions did not makeup to 1% of the number of funds in circulation. The PBoC reported that the digital yuan in circulation amounted to only $2 billion while total transaction volume stood at just over $14 billion.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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