Blockchain News

China Looks to Add Digital Yuan Functionality to Social Security Cards

China is exploring a groundbreaking development that could propel the adoption of its central bank digital currency (CBDC), the digital yuan. According to the 21st Century Business Herald (via NBD), the Ministry of Human Resources and Social Security plans to “explore and promote” the integration of digital yuan payment functions into government-issued social security cards.

Existing plastic social security cards in China already possess smartcard functionality, utilizing bank card-like chips. In 2018, banks were granted the authority to issue these social security cards, which can be linked to their own payment platforms. As part of a larger initiative to digitize these cards by 2027, adding CBDC payment options to plastic cards aims to enhance inclusion for rural and elderly populations, where smartphone ownership levels are comparatively lower.

Chinese citizens rely on social security cards as proof of identity when accessing pension payments, unemployment benefits, and medical insurance coverage. By adding digital yuan payment features to these cards, the government envisions making the digital currency more accessible and user-friendly for a broader range of individuals. This integration also allows Chinese state organs to streamline operations by consolidating payments, benefits disbursements, and ID verification into a single card, facilitating smarter and more efficient governance.

The Ministry of Human Resources and Social Security has released an “Implementation Plan” outlining its proposal, which also includes expanding the range of banking functions that can be performed using social security cards. China has already initiated other pilot programs focused on CBDC inclusion, such as using “hard” offline wallets in the form of smart cards and wearables. Notably, a substantial number of wearable hard wallets are being prepared for distribution to athletes and supporters participating in the upcoming Asian Games, scheduled for September this year in Hangzhou.

While critics express concerns about the potential marginalization of non-smartphone owners through CBDC implementation, Beijing has taken recent steps to ensure inclusivity, particularly targeting “the elderly and children” in adoption efforts. With integrating digital yuan functionality into social security cards, China aims to foster greater financial inclusion and propel the widespread use of its CBDC, bringing digital currency into the mainstream and reshaping the future of transactions in the country.


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