From Red packets to Red Envelopes: How Shenzhen is airdropping digital yuan to stimulate consumer spending
Shanghai Securities News reports that the city of Shenzhen would airdrop 30 million digital Chinese yuan (e-CNY) to local people in an effort to stimulate consumer spending.
The airdrop is a collaboration between the city of Shenzhen and China's biggest meal delivery service, Meituan Dianping. According to the rules, users must first join in to the Meituan app, register for the incentive, and then possibly get the e-CNY incentives via a lottery draw.
If selected, users are then issued e-CNY, which may be spent at over 15,000 in-app merchant terminals that accept the state-owned digital money. Prior to this, the People's Bank of China had recognised the e-CNY as a possible instrument for expanding regional economies and enhancing the efficiency of certain financial services.
In contrast to many other nations, China has adhered strictly to a zero-COVID policy, resulting in the repeated shutdown and closure of non-essential firms in key financial centres such as Shanghai. Last Wednesday, Chinese Prime Minister Li Keqiang convened an emergency meeting with senior Communist Party leaders to review the policy's severe economic effects. From January to April, 20 of China's 31 provinces offered "consumer spending incentives," such as the latest e-CNY airdrop, in response to economic difficulties.
The significance of the city of Shenzhen airdropping 30M in free digital yuan is that it is an attempt to stimulate consumer spending. By giving away free money, the hope is that people will be more likely to spend, which would help boost the economy.
This is just one of many experiments that are taking place in China with their new digital currency. So far, there has been a lot of interest and excitement about the potential of the digital yuan, but it remains to be seen how successful it will be in the long run.
How is the digital yuan different from other digital currencies?
The digital yuan is different from other digital currencies in that it is issued by the Chinese government and backed by the country's reserves.
The digital yuan is also designed to be used in conjunction with China's existing financial infrastructure, which means that it could potentially be more widely adopted than other digital currencies.
How will this stimulate consumer spending?
The hope is that by giving away free money, people will be more likely to spend, which would help boost the economy. Sources at Meituan claim that the e-CNY plays a crucial role in stimulating spending and rejuvenating local enterprises. Shenzhen is also one of the three cities in China where people may presently pay municipal taxes and fees using e-CNY.