The Chinese autonomous region of Guanxi, located in the south of China, will implement a wide adoption plan for the digital yuan, that includes a push for using it as a trade currency with countries part of the ASEAN bloc. This pilot plan looks to be part of the experimentation to step up the usage of the currency at an international level.
Chinese Region of Guanxi to Push Digital Yuan Usage for Trading With ASEAN Nations
The Chinese government is stepping up the pilot program of the digital yuan, its central bank digital currency, in a push to integrate it into trade settlements with countries of the Association of Southeast Asian Nations (ASEAN) bloc. According to reports from the local branch of the People’s Bank of China (PBOC), the Chinese autonomous region of Guanxi will implement various functions of the digital yuan at a nationwide level, and will also pioneer some unique local functions.
These local functions include usage of digital currency in the upcoming China-ASEAN Expo event to be held in September, and also in cross-border trade transactions with other Asian countries. While the digital yuan has been already tested in several cities and even used to pay wages before, this step looks to be one of the first that China is taking to internationalize its digital currency as a trade settlement tool.
Undermining the Power of the Dollar
The internationalization of the digital yuan has been interpreted as an avenue for undermining the usage of the U.S. dollar in trade settlements, and also as a way of sidestepping U.S. dollar-based sanctions by using an alternative digital payment system.
In March, Ju Jiandong, an expert in U.S.-China trade conflicts, remarked on the importance of the digital yuan for the popularization of the yuan on foreign markets, explaining that this depended heavily on the organization of a digital international currency system.
The government sees Guanxi as an important region to bridge cooperation and trade agreements with ASEAN countries, the destination of $185.2 billion in Chinese exports during the first four months of the year, according to customs data.
ASEAN countries are also taking steps to reduce their reliance on the U.S. dollar, calling for the use of national currencies to complete trade settlements to protect against geopolitical repercussions.
What do you think about the implementation of the digital yuan in the Guanxi region to push its adoption in cross-border settlements? Tell us in the comments section below.