No Elaborate Show at Winter Olympics
According to a recent report by CNN, the Chinese government has put several restrictions in place which may limit the scope of the digital yuan trial at the upcoming 2022 Beijing Winter Olympics in February. Earlier in April 2021, there were reports that Beijing was planning to test the national digital currency with foreigners and athletes at the event.
Government officials and Chinese companies have already promoted the use of the digital yuan on an international scale. However, China is said to have developed a robust “quarantine bubble”, in an effort to mitigate the outbreak of the coronavirus. According to CNN, about 11,000 Olympic participants would be restricted from coming in contact with the wider Chinese population, while anyone, whether a citizen or foreigner who is not part of the system, would be completely prohibited from attending the games.
Craig Singleton, a senior China fellow at the Foundation for Defense of Democracies, said:
“The Olympic Games would have been the first real chance for tourists and Chinese nationals alike to familiarize themselves with the digital yuan, but that door slammed shut when the Chinese government decided to severely restrict the number of Olympic spectators.”
Singleton further said that the government’s action was enough to possibly slow down the mass adoption of its digital yuan.
Privacy Concerns Regarding China’s CBDC
Apart from Beijing’s stringent COVID-19 restrictions, political tensions could also affect the widespread adoption of China’s CBDC. In July 2021, three U.S. Republican Senators, Marsha Blackburn, Roger Wicker, and Cynthia Lummis wrote a letter to the United States Olympic and Paralympic Committee (USOPC) to forbid American athletes from using the digital yuan in any way.
The Senators argued that the CBDC could be used to monitor U.S. athletes, even after they had returned from China. Although the USOPC did not publicly respond to the letter, the committee reportedly advised American athletes to use burner phones when in China in order to block possible surveillance. Other countries are reportedly advising their national athletes to adopt similar measures.
Meanwhile, the senior adviser and trustee chair in Chinese Business and Economics at the Center for Strategic and International Studies, Scott Kennedy, believes that the number of attendees at the Winter Olympics who use China’s CBDC may not have a significant impact on overall transaction volume.
Chinese Users not Enthusiastic
China has been testing its digital yuan in large major cities such as Shenzhen, Suzhou, and Chengdu. CBDC pilots saw the distribution of “red packets” which contained 200 digital yuan distributed to lucky winners in a lottery program. However, China’s accelerated testing approach has raised privacy concerns within and outside the country. There has been speculation from the United States that the Chinese CBDC project was being developed to topple the dominance of the U.S. Dollar.
While digital yuan trials have been expanded and accelerated, there appears to be an overall lack of enthusiasm for the CBDC among Chinese citizens. For most of the users, the digital yuan does not possess any unique characteristics that offer advantages over existing private payment providers such as Alipay and WeChat Pay.
According to Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics:
“The ecosystems that have been built now for a decade around the big tech firms are unbeatable in terms of network and convenience.”
