A new round of successful trials is putting China on track to become the first country to launch a digital currency. The transition to a fully-digitized legal tender should be relatively painless for China’s citizens, who already use apps like WeChat Pay and Alipay to make most of their payments. But the renminbi-backed currency would also reshuffle the current field of payment providers on the Mainland, as a country-wide digital yuan rollout would redirect hundreds of millions of users away from their current digital payment providers and toward a new state-run app.
The Jing Take
While China has been developing its trailblazing digital yuan over the past five years, payment providers like Alipay have reaped massive rewards, overtaking banks in the electronic payments arena. Combined, Alipay and Tencent’s WeChat Pay have enabled payments for over one billion users through QR-code scans — a market that’s valued by iResearch at over $19 trillion. But the recent acceleration of state trials indicates that Beijing wants to halt this monopoly, and Chinese media outlets have reported that WeChat Pay and Alipay are already considering cutting their staff.
Moreover, this rollout would have the potential to not only derail domestic monopolies but also disrupt the global monetary system. Specifically, it could be seen as a direct challenge to the globe’s preferred currency: the dollar.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.