Beijing is expressing optimism about the international use of the digital yuan, with Chinese experts now discussing the integration of the digital currency with the Belt and Road Initiative (BRI) or “new Silk Road.”
According to the Chinese Securities Journal, Li Jianjun, the Vice President of the Central University of Finance and Economics, highlighted the potential of the digital yuan in the BRI’s “financial cooperation.” He suggested building the necessary economic, cultural, and policy mechanisms to implement the digital yuan within the project.
Li emphasized the importance of consolidating technology, facilities, and rules to enable the implementation of the digital yuan on the “new Silk Road.” The BRI, also referred to as the “new Silk Road” or “One Belt, One Road,” is a global infrastructure development strategy aimed at enhancing foreign and economic policies, led by Chinese President Xi Jinping. It involves significant investments in infrastructure and communications networks worldwide, making China the largest bilateral lender globally.
The Digital Yuan and BRI: Future Plans for China?
China has allowed debtors to exchange local currencies for the digital yuan in loan agreements with other nations. Observers speculate that China’s international goal with the digital yuan involves facilitating cross-border trade. Allies like Russia have openly discussed conducting cross-border trade using interoperable central bank digital currencies (CBDCs). Beijing has also been collaborating on international CBDC projects with other central banks.
Until recently, the Chinese central bank, the People’s Bank of China (PBoC), claimed that the digital yuan was primarily a domestic project aimed at enhancing domestic financial inclusivity and providing non-cash alternatives for the unbanked population. However, the PBoC is now calling for the expansion of “cross-border” uses of the digital yuan, potentially extending its reach to BRI regions. Sub-Saharan Africa, which has a large unbanked population of up to 500 million individuals and has experienced a significant increase in Chinese BRI investment, could be one region that benefits from such expansion.
The Chinese Securities Journal also quoted Hong Junjie, the Vice President of the University of International Business and Economics, who emphasized the role of digitalization in future globalization. Hong advocated for promoting development, inclusiveness, and digitization throughout the entire foreign trade chain. He suggested the establishment of a digital governance platform and the development of cross-border e-commerce to connect domestic and international markets.
