China's Digital Yuan New Year Giveaway

The Chinese government handed out around 180m digital yuan worth $26,6m to its citizens to celebrate the New Year and Spring Festival and promote the digital currency.

Happy chinese new year 2023 year of the rabbit
China promotes digital yuan with New Year giveaway

This year, Chinese New Year, one of the most important celebrations in Chinese culture, started on January 21, the last day of the Year of the Tiger. New Year's Eve was followed by a 15-day festival that ended on February 5. The Chinese government added even more festive spirit to the season, handing out to its citizens a total of 180 million digital yuan worth $26,6M.

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Consumers could spend their digital money on tickets to cultural events, shopping and food delivery. Numerous Chinese companies benefited from the subsidies and used their digital yuan to cover business expenses such as the costs of sales promotion and advertising.

One of the most notable monetary prizes was offered by lifestyle and food delivery app Meituan, which launched smart contracts for digital yuan in January. The platform offered daily prize pools of 8,888 RMB ($1,312) to app users who paid with digital yuan and matched some of the daily changing keywords with the words on the lists of their purchases.

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The matching process was a component of the Meituan’s smart contract mechanism activated by payments in yuan. A user who happened to have at least some of the keywords among the names of the purchased items received a portion of the prize pool to one's digital yuan wallet.

While some provinces offered 50% discounts at stores and restaurants for payments in digital yuan, the city of Hangzhou simply doled out ¥80 ($12) to each of its residents.

Digital yuan is also known as e-yuan, e-CNY and e-RNB. Although many people refer to it as "Chinese cryptocurrency," this term is incorrect. e-CNY does not operate on a blockchain and is issued by the People's Bank of China (PBOC), which also backs this currency with its fiat funds. This makes e-CNY a central bank digital currency (CBDC).

Chinese digital currency has been available since 2020 when it was still in the early testing phase. The government expects full adoption by the end of 2024, and the aim of the New Year campaigns was to accelerate the process.

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3 people holding 3 smartphones with digital yuan on the screens

At press time, the digital yuan is not available to foreign investors, but travelers can use it to make payments through the Digital Yuan App while visiting China.

Meanwhile, the Federal Reserve of the USA is exploring the advantages and possible challenges of launching a digital version of the dollar. The team behind The Digital Dollar Project believes that "by developing a tokenized central bank digital currency, the United States can lead the world in this innovation sector for the next century."