Close-up of Mao Zedong's portrait on 5 Yuan RMB,10 Yuan RMB,100 Yuan RMB
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How China's digital yuan could change the world

Protocol China

Good morning. In this week's Protocol | China newsletter: what the digital yuan means for the world, a new slate of reading apps backed by Chinese big tech that feature Chinese IP, and Shenzhen's ambitious effort to get unicorns to return from overseas.

The big story

Beijing is getting serious about a centrally backed digital currency, one that the People's Bank of China has been rolling out on a test basis in several major Chinese cities. The digital yuan (or e-CNY) has the potential to change the global financial system and diminish the role of the U.S. dollar in the medium to long term, leading experts tell Protocol. In the latest edition of Braintrust, five guests discuss what this innovation means for the rest of the world.

China's making a big bet on the new currency, but it's one that many of the experts think could pay off.

  • "China is one of the few countries that affirmatively believes technology is becoming far more important than money, or at least the traditional idea of it," Rebecca Liao, co-founder of Skuchain, writes.
  • The effort has "turned heads in financial and national security circles," writes Atlantic Council senior fellow (and former government official) Julia Friedlander.

The tech could ultimately go global. "China's central bank is leading the technology committee of a multi-[Central Bank Digital Currency] arrangement with Thailand and the UAE that, if successful, could dramatically lower cross-border CBDC payment costs," writes Robert Greene of the Carnegie Endowment for International Peace.

As for weakening the U.S. dollar's position? The experts say China's not directly trying to do that right now, but it could happen anyway. The big question: whether the e-CNY leads to a global digital payments platform backed by central banks.

  • The e-CNY could lead to "new cross-border payments infrastructure that undermines U.S. interests," but only if the e-CNY "becomes interoperable with other countries' payments systems," Greene writes.
  • "Sure, some governments might have done it anyway," CoinDesk managing director Emily Parker writes. "But China may be spurring others to act faster."

And a lot could change in the next decade. Some experts expect the U.S. could gradually lose its dominant position in international finance, but it wouldn't be fast and it would require China to do some things very differently.

  • Liao writes that "Beijing wants to increase the use of RMB offshore to slowly reorient an international financial infrastructure centered on the U.S. and its economic leadership."
  • The key here is the word "slowly." Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, writes that China's major barriers aren't technical at all; it will need to loosen capital controls and "develop an immense ecosystem around the digital RMB, including deep and liquid foreign exchange markets." That will require a lot of internal political wrangling to accomplish.

The ball appears to be in the U.S.'s court. U.S. Federal Reserve Bank Chair Jerome Powell said in September that U.S. monetary authorities were evaluating whether to issue their own centrally-backed digital currency. But he cautioned that "it's more important to do this right than to do it fast." What happens next could have implications beyond 2030.

Handling gender, diversity and difference in Chinese workplaces

While U.S. society and American employers publicly struggle with questions of diversity, equity and inclusion, Chinese workplaces are facing similar headwinds and similar opportunities. What are China's most forward-looking workplaces, and what are they doing to become more inclusive? In this event on Oct. 28 at 5 p.m. PT / 8 p.m. ET (or 8 a.m. on Oct. 29 in Beijing), we'll talk about some key companies leading the way for inclusion in China, identify what might port over to U.S. workplaces and highlight the obstacles Chinese companies are facing in their DEI efforts.

RSVP here.


As we come out of the pandemic, consumers will be even more accustomed to highly flexible, customer-centric digital experiences that let them engage with companies on their own terms. Businesses must consider the impact of an even more digital economy with dynamic buyer behaviors and determine how next-generation customers want to consume products and services and interact with them.

Learn more

On Protocol | China

China is changing the way the world reads. In a throwback to the Victorian days of serialized novels, Chinese online fiction platforms have gone global, getting readers addicted to the experience of paying chapter by chapter — reading a novel as it's being constructed. Chinese apps like ByteDance-backed Fictum and Spanish-language Wonderfic are advertising aggressively around the world, climbing the App Store rankings and exporting made-in-China IP to foreign audiences. Zeyi Yang has more on this surprising soft power wave.

Another lesbian dating app in China just shut down. Lesdo has announced it will terminate all services at the end of this month, marking yet another Chinese lesbian dating app to disappear or pivot away from its core audience. But on the platforms themselves, Chinese gay dating apps are doing gangbusters. So what's going on? Zeyi Yang unpacks the mix of regulatory and bottom-line pressure making it hard to serve a Chinese market that's about 10 million strong.

Big Brother Beijing

Chinese NFTs become the tech that shall not be named. Beijing has told several Chinese tech companies to crack down on NFTs, Chinese crypto journalist Colin Wu reported Saturday. Tencent and Alibaba, which have released several NFT products on their own semi-private blockchains, both promptly removed mentions of NFTs on their websites. The products are now only referred to as "digital collectibles," and Alibaba's AntChain said it "firmly opposes price speculation around NFT products" in a statement.

Predicting the next five years of ecommerce in China. To know what's probably going to happen in major sectors of China's economy, it helps a lot to look at what the government says it's going to do. On Tuesday, three of China's most powerful ministries jointly released a five-year blueprint for China's ecommerce industry. Among many detailed plans for growth, the plan sets a goal for China's total ecommerce sales to grow 23% over five years while also setting specific goals for rural ecommerce sales and cross-border ecommerce.

Shenzhen wants to lure unicorns back to China, Chinese publication Securities Times reported Tuesday. Beside incubating and directing public funds to startups in strategically important industries, the city is hoping to attract "unicorn companies that have listed overseas to come back and list domestically." That's a tall order, but we can't ever fault Shenzhen for a lack of ambition.

Straight from China's web

Bilibili makes a curious investment. The Chinese video platform popular among Gen Zers has just invested in Guancha, a nationalist publication with state ties, according to corporate filings database Tianyancha. The exact amount of the investment is unclear, but Guancha's authorized capital increased by about $480,000 in the filing. Guancha, as the Taiwan-based think tank Doublethink Lab analyzed, has its origins in the Shanghai Academy of Social Sciences, a state entity.

What happened to China's most successful YouTube influencer? Li Ziqi, who has 16 million subscribers to her back-to-the-farm YouTube food channel, hasn't uploaded anything for three months. In now-deleted social media posts, Li hinted that she has been fighting against her marketing agency, which owns a majority stake in Li's personal brand. On Monday, court records showed that Li Ziqi had filed a lawsuit against the marketing agency and its owner. The purpose of the lawsuit could be to win back the trademark of Li's name, Chinese publication Time Weekly said.

Want to know who's still working 996? Ask a taxi driver. China's government has been clear that the 996 work schedule (9 a.m. to 9 p.m., six days a week) violates overtime rules. But tech firms love it, and China's taxi drivers know who's not obeying those laws. A ride-hailing driver in Hangzhou told Chinese media DoNews that every day he drops by Alibaba's headquarters at 9 p.m. and surveillance company Hikvision's headquarters at 10 p.m., because that's when most employees leave their offices.

China goes global

Tesla says yes to China's data security storage rule. On Monday, the company completed construction work on its Giga Shanghai Data Center and R&D Innovation Center, Shanghai-based publication CnEVPost reported. The data center, expected to be in use soon, will store Tesla China's data locally, meeting Beijing's data security requirements. The R&D center is also Tesla's first outside the United States.

A ByteDance investor from Philly considers cashing out. One of ByteDance's earliest and largest investors, Investment firm Susquehanna International Group, is in the Philadelphia suburbs, and it's considering selling about $500 million of its shares in the company, Bloomberg reported last week. It was motivated by the need to diversify its portfolio during China's tech crackdown. Susquehanna, having put its first bet on the Chinese company in 2012, was ByteDance's largest outside backer, ultimately taking a 15% stake in 2020.

India scrutinizes Chinese smartphones. In a move targeting Chinese smartphone brands, the Indian government is exploring ways to mandate smartphone inspection for security concerns. Sources told the Indian publication Economic Times that Chinese brands are the focus and "the government can put in a special provision for companies from countries that share borders with India." Currently, Chinese brands like Xiaomi, Oppo, Vivo and Realme dominate the Indian smartphone market.

One more thing

Jack Ma is enjoying his European vacation. After staying inside China for more than a year, Jack Ma has chosen Europe as his first overseas destination since emerging. So far, Ma has shown up in Spain and the Netherlands, part of a supposed personal study trip to visit agriculture technology research institutions, according to the South China Morning Post.

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