China’s eastern city of Changshu is set to implement the use of digital yuan (e-CNY) to pay public sector employees’ salaries. One China observer believes that Beijing’s goal in introducing the digital yuan is to strengthen its control—at the cost of further deteriorating the economy and human rights of the Chinese people.
Changshu recently announced that starting in May, its civil servants and employees of state-owned companies at all levels will be paid in digital yuan.
Changshu is located in the eastern part of Jiangsu Province and is considered a satellite city of Suzhou.
China has been researching the possibility of digital currency since 2014. However, the first test of the e-CNY system did not take place until 2020, with a trial launch in Shenzhen, Suzhou, Chengdu, and Xiong'an. In 2021, these trials were extended to Hainan Province, Shanghai, and several other cities.
Speaking to The Epoch Times on April 28, Ou Kai, a Japan-based current affairs commentator, said that the Chinese Communist Party’s introduction of the digital yuan is mainly for the purpose of solidifying its totalitarian control, as part of the regime’s digital totalitarianism. He believes the CCP’s increased control will lead to “continued deterioration of China’s economic and human rights conditions.”
“The tighter the control, the more financial and human resources are consumed, and the greater the corruption that exists within. Therefore, in the end, what appears to be an immensely powerful system is nothing more than a chain of interests. If this huge system cannot sustain these interests one day, it will collapse with nothing left,” he said.
As of April, the digital yuan pilot program has been expanded to 26 areas in 17 provinces and municipalities nationwide.
Cash transactions are completely anonymous, whereas digital yuan payments offer limited anonymity. For larger payments, users will need to provide valid identification. Chinese authorities have set requirements for different types of digital yuan wallets, where the lowest privileged Type 4 wallets can be anonymous. However, they are still tied to the user’s cell phone number. Type 4 wallets allow for a maximum single payment of 2,000 yuan (about $300), a maximum daily cumulative payment of 5,000 yuan (about $750), and a maximum annual cumulative payment of 50,000 yuan (about $7,500), according to Chinese media reports.
“Even without the digital yuan, the current WeChat Pay and Alipay are enough for the CCP to monitor the privacy of a large number of Chinese people,” Ou said.
“Digital yuan is clearly different from the paper yuan in circulation because it cannot be exchanged for gold or foreign currency. Moreover, it can only be used for general retail purchase and can be highly controlled.”
Chinese nationals had to use ration stamps to purchase daily necessities decades ago due to severe commodity shortages.
“The digital yuan is the new type of food stamps and cloth stamps introduced by the CCP. This is also a preparation of the CCP for its future disconnection from the world,” Ou said.
While Changshu has recently made headlines for issuing digital yuan salaries, it’s not the first Chinese city to do so. As early as June 2022, Taicang, another satellite city under Suzhou, started paying public institution employees in digital yuan, according to a local government report.
In China’s tech hub Shenzhen, more than 28 million digital yuan wallets were established by the end of 2022. In the same year, the city distributed over 570 million yuan ($82.58 million) worth of digital currency in consumer subsidies, as reported by Chinese state media.
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