Major business players are joining the Hong Kong-Mainland China “cross-border” digital yuan pilot – including the e-commerce giant JD.com and the Bank of China.
The Bank of China is one of Mainland China’s largest state-run commercial banks, while JD.com is arguably the nation’s answer to Amazon.
The pilot will involve the JD subsidiaries JD Technology and JD Global Sales. The former deals with IT projects, while the latter processes transactions and sales for locations outside the Mainland.
Per CICC Online, the move will make JD the first major Mainland-based company to support cross-border digital yuan trade.
Media outlets have reported that “hundreds” of vendors in Hong Kong have begun accepting digital yuan payments as part of the pilot. Consumers in Hong Kong have also begun making use of “hard” digital yuan wallets – which are now available at special dispensing machines.
The Bank of China and JD.com have been attempting to drum up interest in the project by distributing thousands of “digital red envelopes” – in a lucky draw/giveaway-type promotion. This tactic has also been used extensively on the Mainland.
Consumers are invited to register their interest via their smartphones. Those who receive a “red envelope” can access free digital yuan holdings – provided they open a Bank of China digital yuan wallet and use the funds to pay for goods and services on JD’s platform.
The Bank of China also operates Hong Kong-based branches, as well as a Hong Kong-focused subsidiary.
Cross-border Payments – China’s Digital Yuan’s New Target
While the central People’s Bank of China (PBoC) has previously downplayed the digital yuan’s cross-border potential, as of late last year, it has cautiously begun redrawing its playbook – beginning with the Hong Kong pilot. A similar pilot is also underway in Macau, another territory that has its own currency.
The same media outlet noted that Chinese “industry insiders” predict that there will be “substantial growth” in the nation’s cross-border payments market this year. They believe cross-border “consumption” may grow to $244 million.
The media outlet, perhaps reflecting recent PBoC policy, wrote that “with its smart pay advantages, the digital yuan has plenty of room for development in the cross-border consumption sector.”