China Inaugurates First Industrial Park for Digital Yuan Development in Shenzhen

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According to Chinese press reports, China has inaugurated its first industrial park in Shenzhen to promote the growth of its central bank digital currency (CBDC), the digital Yuan (also known as e-CNY or digital RMB).

The initiative seeks to facilitate payment solutions across diverse industries, drive the adoption of smart contracts built on blockchain technologies, combine hardware wallets with smart devices, and support the operation and promotion of e-CNY, among other goals.

According to the reports, the government is set to allocate 100 million yuan ($13.7 million) as special support funds over the next three years to develop the digital ecosystem in Luohu.

The Luohu Park will attract branches of commercial banks involved in e-CNY, and players specialised in the sector to establish a hub for e-CNY industrial clusters. Substantial settlement incentives of up to 20 million yuan each will be offered to attract and support these entities.

Startups involved in e-CNY operations will receive settlement incentives of up to 50 million yuan based on their investments and up to 500,000 yuan each based on revenue achievements.

The park will host nine inaugural residents. Among the early settlers of the park is Zeng Zhaoxiang, the executive deputy director of the payments solution company Wuhan Tianyu Information Ltd.

Zhaoxiang explained what attracted his company to the park, “Luohu is the first district to pilot the application of digital RMB. It has many advantages in terms of digital RMB operating scenarios and has a leading position in the reserve of relevant talent nationwide.”

China’s digital currency pilot program began in 2019 and has gained significant traction. As of August 2023, 5.6 million registered merchants across the country accepted e-CNY, and 360 million transactions were recorded, with the total value of e-CNY transactions reaching 100.04 billion yuan ($13.9 billion).

Shenzhen is one of the most active cities in China with respect to eCNY adoption. The Shenzhen branch of the Central People’s Bank of China (PBoC) claimed that as of June 2023, more than 35.94 million digital CNY wallets had been opened by individuals and companies based in Shenzhen.

China’s digital yuan industrial park in Shenzhen is a significant milestone for the country’s CBDC program. It showcases the government’s commitment to nurturing the ecosystem. The park will likely attract many companies and organisations to Shenzhen, which will help accelerate the development of the digital Yuan.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash