Chinese city officials in Changshu, a city in China's Jiangsu province, will begin receiving their full salaries in digital yuan this coming May.
Cointelegraph tells us that a notice issued by the Changshu Local Financial Supervision Bureau and the Changshu Municipal Bureau of Finance first mentioned the shift.
Civil Servants Paid in Digital Currency
This new initiative will include civil servants at all levels, personnel from public institutions, and personnel from city-owned units.
This move follows the success of a digital yuan pilot program in Jiangsu province. By 2025, the program hopes to have established an efficient and convenient digital RMB operation and management system.
Chinese Government CBDC Adoption
This shift to digital payments corresponds to the Chinese government's ongoing push for CBDC adoption. The adoption, however, has not been well received by Hong Kong residents.
Despite the government-subsidized 20% discount on purchases from 1,400 local vendors, local news outlets report that only 625 Hong Kong residents signed up for the digital yuan hard wallet launch in the first four days.
The transition to digital yuan payments is expected to simplify salary payments and reduce reliance on cash. Furthermore, this move is expected to increase digital currency adoption and financial transparency.
Shift to Digital Payments
Cointelegraph reports that an on-site employee at a local hospital in Changshu confirmed that the workforce would begin receiving payments in digital yuan next month. Employees can also opt for digital yuan settlements via self-service terminals, according to reporters.
This shift to digital payments is part of China's larger digitization trend.
In recent years, China's digital economy has expanded rapidly. In 2021, Statista tells us that the economy was valued at approximately 45.5 trillion yuan, with a nominal year-on-year growth rate of 16.2 percent, significantly higher than the country's nominal GDP growth rate of 3.4 percent.
In the midst of the coronavirus COVID-19 pandemic, an increasing number of businesses have chosen digitalization solutions for business operations.
The South China Morning Post notes that China avoided a recession after its economy expanded by 3.2% in 2020, making it the first major economy to recover from the pandemic's damage. This bolstered expectations for continued growth in the country's digital economy.
The adoption of the digital yuan is also expected to provide benefits such as improved cross-border payments and increased financial security.
However, there have been concerns raised about the privacy implications of digital payments, as well as the possibility of government surveillance.
Despite these reservations, Changshu's adoption of the digital yuan is expected to benefit the city's economy and residents. The shift to digital payments is part of China's larger strategy to position itself as a global leader in digital technology and innovation.
What's in the news?
Chinese city officials in Changshu will begin receiving their full salaries in digital yuan beginning next month, which is a significant development in China's ongoing push toward CBDC adoption.
This move is expected to increase digital currency adoption and financial transparency, as well as streamline salary payments and reduce reliance on cash.
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