Residents in three major Chinese cities have begun paying taxes, stamp duty, and social security contributions with the digital yuan, the country’s central bank’s digital currency (e-CNY).
According to a domestic news article, a number of government entities in Zhejiang province, which is located just south of Shanghai, are currently conducting real-world trials involving citizens paying taxes using the digital yuan.
The Zhejiang Taxation Bureau is collaborating with China’s central bank, the People’s Bank of China (PBoC), to investigate a number of digital yuan-based tax payment options.
The PBoC and allied local government organizations are apparently looking forward to the Asian Games, which will be held in Hangzhou in September, as the next significant test for the digital yuan. The digital yuan, according to local authorities, might be utilized to simplify the calculation of tax-related tasks.
The PBoC indicated that it will look to expand the digital RMB pilot program to further Chinese cities, including Guangzhou, Tianjin, and Chongqing, following the successful implementation of the initiative, which began public testing in April 2021.
On the other hand, one local government has elected to “airdrop” 15 million digital yuan ($2.25 million) to its citizens in order to encourage consumer spending and promote use of the new currency during the pandemic.
Approximately 130,000 inhabitants of Shenzhen’s Futian neighborhood will get a red envelope containing a portion of the 15 million digital yuan (e-CNY) via the Chinese social media app WeChat. The digital RMB airdrop is the government’s most recent attempt to encourage spending in areas of China that have been hardest hit by the recent Covid-related restrictions.
Money is frequently given out in red packets or envelopes in Chinese and other East Asian cultures, as the color red bestows good wishes and luck on the recipient.
With the bulk of countries still in the research stages of CBDC implementation, these advancements extend China’s already large lead in building a central bank digital currency (CBDC) for public usage.
According to state media, digital yuan transactions in China totaled roughly 87.6 billion yuan by the end of 2021.
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