The Chinese government plans to increase the international activity of the Shanghai Special Economic Zone by connecting it to the central bank digital currency (CBDC) testing. By 2027, the digital yuan (e-CNY) will be used in cross-border trade and fiscal programs implemented in the Pudong area.
The Chinese Communist Party Central Committee published a five-year development plan for the Pudong New Area of Shanghai. According to it, the area will become an international trade center by 2027 and expand the CBDC pilot program.
The five-year development plan for Pudong Area includes:
- creation of a commercial mediation system that complies with international standards;
- simplification of customs procedures;
- improving supply chain management through local port facilities, close-by free trade zones, and an international airport;
- modernization of educational and medical institutions with the opportunity to attract foreign talents for research and leading-edge developments.
In addition to making Pudong an international shopping center, the initiative will allow for a significant expansion of the digital yuan (e-CNY) project. The Chinese government plans to use CBDC in all financial transactions in the area, including:
- trade settlements;
- e-commerce payments;
- carbon credit payments;
- green energy trading;
- using fiscal funds.
In 2023, the e-CNY pilot project gained international status. The PRC authorities approved CBDC for transactions in the securities market, the Bank of China used digital yuan for the first time to buy precious metals, Suzhou municipality started using CBDC to pay for services related to cross-border railway transportation. Three international banks and one of the UK’s largest banks joined the e-CNY pilot testing.
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