Social Navigation and Bank of China join digital yuan pilot project between mainland China and Hong Kong


Hong Kong's Victoria Harbour. and Bank of China join digital yuan pilot project between mainland China and Hong Kong

Hong Kong's Victoria Harbour.
Source: Ttstudio/Adobe

Major commercial players are joining the “cross-border” digital yuan pilot between Hong Kong and mainland China, including e-commerce giant and the Bank of China.

The Bank of China is one of mainland China’s largest state-owned commercial banks, while is arguably the national answer to Amazon.

The pilot will involve JD subsidiaries, JD Technology and JD Global Sales. The former deals with IT projects, while the latter deals with transactions and sales for sites located outside the continent.

According to CICC Online, the move will make JD the first major mainland-based company to support cross-border digital yuan trading.

Media reported that “hundreds” of sellers in Hong Kong have started accepting digital payments in yuan under the pilot project. Consumers in Hong Kong have also started using “hard” yuan digital wallets – which are now available at special vending machines.

The Bank of China and attempted to generate interest in the project by giving out thousands of “digital red envelopes” – in a raffle/giveaway type promotion. This tactic was also widely used on the continent.

Consumers are invited to express their interest via their smartphones. Those who receive a “red envelope” can access digital yuan holdings for free – provided they open a Bank of China digital yuan wallet and use the funds to pay for goods and services on the platform by JD.

Bank of China also operates Hong Kong-based branches, as well as a Hong Kong-focused subsidiary.

An illustration of shoppers and tourists in China, as well as an artistic rendition of a digital yuan token.
Digital yuan promotional materials in English for residents of Hong Kong, published by Bank of China. (Source: Bank of China).

Cross-Border Payments – The New Target of the Chinese Digital Yuan

While the People’s Central Bank of China (PBoC) previously downplayed the cross-border potential of the digital yuan, late last year it cautiously began to redesign its playbook – starting with the Hong Kong pilot. A similar pilot is also underway in Macau, another territory that has its own currency.

The same outlet noted that Chinese “industry insiders” predict there will be “substantial growth” in the country’s cross-border payments market this year. They think cross-border “consumption” could be as high as $244 million.

The outlet, possibly reflecting recent PBoC policy, wrote that “with its smart payment advantages, the digital yuan has a lot of room for development in the cross-border consumer sector.”

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.