Shanghai's Ambitious Blueprint: Extensive Digital Yuan Pilots in Pudong's Modernization Plan

China's strategic Belt & Road Initiative partners set to benefit from an international trade hub equipped with various applications of the digital yuan.

In an expansive modernization initiative for Shanghai's Pudong New Area, the Chinese Communist Party Central Committee and General Office of the State Council have revealed a comprehensive five-year plan. The plan, as outlined by the state-run Xinhua News Agency, not only includes significant international trade enhancements but also incorporates numerous pilot projects for the digital yuan, China's experimental central bank digital currency (CBDC).

Under the proposed plan, Pudong New Area will be bestowed with new authorities, transforming it into an international hub featuring a commercial mediation system aligned with global standards and streamlined customs procedures. Enhanced supply chain management, facilitated by newly constructed port facilities, adjacent free trade zones, and Shanghai Pudong International Airport, aims to facilitate the smoother movement of commodities.

The plan emphasizes the establishment of educational institutions with unique intellectual property rights for research and development, attracting foreign talent through a specialized visa regime. This initiative is designed to lure experts from nations participating in China's Belt & Road Initiative, creating world-class medical and educational facilities.

Amid these advancements, the digital yuan, also known as digital renminbi, is set to play a pivotal role. The plan outlines specific imperatives, including piloting the use of digital renminbi in various sectors such as trade settlement, e-commerce payments, carbon trading, and green power trading. The objective is to standardize and broaden the application scenarios of the digital yuan within fiscal fund utilization.

The document projects that by 2027, significant progress in institutional innovation and the construction of a high-standard market system will be achieved, establishing a new high-level open economic system.

China has been actively exploring use cases for the digital yuan, forging collaborations with foreign banks and utilizing the digital currency for transactions such as gold and petroleum deals on Shanghai exchanges.

In contrast, the Chinese government has intensified its crackdown on cryptocurrencies this year, issuing warnings against the use of stablecoins like Tether and banning crypto mining in the country. This stern approach has garnered reactions from U.S. politicians, with Senator Rick Scott introducing the Chinese CBDC Prohibition Act in an effort to counter the progress of the digital yuan.

(Photo Source / Int Finance Magazine)