Major State-Owned Banks Promote Digital Yuan Over Alipay and Wechat Pay

Six leading Chinese banks are promoting the digital yuan as a better alternative to existing major payment providers WeChat Pay and Alipay, ahead of an upcoming shopping festival.

Banks Push for Digital Yuan Usage for Shopping Festival

According to Reuters on Monday (April 26, 2021), China’s major state-owned banks are pushing the use of the digital yuan for a shopping festival coming up on May 5 in Shanghai. The report noted that these banks are urging retail clients and merchants to download the digital wallet to enable purchases with the CBDC, which would bypass WeChat Pay and Alipay.

Some of the major banks involved in the digital yuan pilot scheme include the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China (ABC)  and China Construction Bank.

In order to attract spenders to the digital yuan, the People’s Bank of China (PBOC) could distribute free red envelopes or give discounts to Shanghai residents to use for purchase during the shopping festival. 

A bank official who is involved with the Shanghai trial of the e-CNY said that the digital yuan was a better alternative compared to Alipay and WeChat Pay. According to the anonymous official:

“People will realise that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat Pay anymore.” 

China Working to Lessen Alipay and Wechat Pay’s Dominance

Alibaba’s Alipay and Tencent’s WeChat Pay maintain a duopoly in China’s mobile payment sector, controlling over 90 percent of the market. Meanwhile, Beijing has been reportedly seeking to water down the dominance of the payment giants. 

Back in November 2020, Chinese regulators stopped Ant Group’s initial public offering (IPO), which would have been the world’s largest IPO. In March 2021, Tencent along with other major tech companies were fined for failing to disclose their acquisitions. Earlier this April, Alibaba was slammed with a $2.8 billion antitrust fine.

However back in October 2020, PBOC’s director-general of the digital currency institute, Mu Changchun, said that the digital yuan would not challenge Alipay and WeChat Pay, rather, the e-CNY would work with the two major payment platforms. 

Meanwhile, as reported by BTCManager in March, Mu Changchun said that the duopoly held by Alipay and WeChat Pay posed a financial risk, should the online payments giants encounter a problem. However, the PBOC official stated that China’s CBDC project would act as a backup and ensure financial stability if both platforms have any issues. 

According to the Global TMT Leader, PwC China, Wilson Chow, it would take a while for the digital yuan to see mass adoption. Chow speculated that in a few years, China’s CBDC would hold 10 percent of the country’s mobile payments market, existing alongside WeChat Pay and Alipay.

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Our Man in Shanghai: Filecoin the talk of the town, Polkadot and NFTs gain attention

Distributed storage network project Filecoin is the talk of the town as FIL was the most highly traded token on Huobi, OKEx and Gate on Thursday. These three exchanges have a predominantly Chinese user base and represent a large part of the Tier One trading volume for major pairs. On Thursday afternoon, Huobi trading volumes of FIL were more than three times that of BTC as the price reached a 7-day increase of 170%.

Filecoin has had strong success in capturing the attention of Chinese investors, including large investment groups such as Fenbushi Capital, SNZ Capital and Neo’s EcoFund. These three were part of a group that backed the $23 million Filecoin Ecosystem Fund, announced on March 25. The Filecoin Ecosystem Fund is intended to support projects and help development on the network. It could also give backers early access to new projects, which is a lucrative model for VCs in an increasingly crowded investment space. It remains to be seen which of these two consequences are a bigger priority for the funds involved.

On March 28, OKEx produced a video explaining the concepts behind Filecoin, which received around 600 shares and 3400 likes on Weibo. This shows a high level of attention from the Chinese retail audience, a demographic that is tough to obtain and hard to preserve over longer time-frames.

NFTs in Beijing, Polkadot in Hangzhou

Beijing-based BlockCreateArt hosted a major NFT art exhibition on March 26 supported by auction house Christie’s, Digital Finance Group and mining rig producer Bitmain. Interest in digital art has increased on some levels in China, but cultural and artistic differences have led to a more pragmatic approach towards leading digital artists such as Beeple. The exhibition will be stopping in Shanghai early in April.

Hangzhou was home to the Open Days blockchain exhibition sponsored by Candaq Fintech Group. The event had one hall dedicated to Polkadot projects, with speakers from Rarelink, Litenty and Phala, among others. The upcoming parachain auctions have become a topic of interest with so many local projects and projects with ties to the region being built on Polkadot.

Central bank head says digital yuan playing catch-up

The head of the Digital Currency Research Institute at the People’s Bank of China has recognized that private payment processors Alipay and WeChat Pay are in a dominant position in the Chinese payment space. During a panel appearance, Wang Changchun noted that the government-backed digital currency would be needed to maintain stability should something happen to the existing solutions. For the moment, WeChat Pay and Alipay don’t seem to be in any imminent danger of losing their market share, but that could change quickly if government-led incentives were put in place for those willing to convert.

In enterprise news, electric vehicles brand IM Motors, working with SAIC Motor and Alibaba, announced a blockchain powered service network that would incentivize customers to share data with the company. In order to achieve some level of traceability and resistance to tampering, on-chain points would be given to customers using the vehicle and related apps.

The blockchain network was announced as exclusive and private, so while it represents a slight normalization of blockchain technology, it will likely have much in common with more centralized storage networks.

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.


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