Digital currencies could turn out to be crucial for economic boost that China’s planning to utilize to do the same
China is on its way to give a boost to its economic condition and financial activities through digital currencies. Following the same, country’s some prominent cities including Shenzhen, Xiong’an New Area and Guangzhou have announced that they are going to distribute Chinese CBDC, digital Yuan for free. The plan is to distribute free digital Yuan ‘red packets’ in order to boost its consumption and adoption locally amidst the economic slowdown due to mass lockdowns during Covid-19 Pandemic.
Further details about the free distribution of Digital Yuan, Shenzhen will give out about 30 million digital Yuan worth $4.5 million from this thursday. Free distribution of Digital Yuan would be conducted through a lottery system that would give chances to the residents to win about 88, 100, and 128 red packets of Digital Yuan. These Red packets are actually considered to be monetary gifts in many countries in Asian region including China.
Since these monetary gifts are in red envelopes and given on special occasions, from there they got their name of being called as red packets. However, the Central bank digital currency (CBDC) of China, also called e-CNY, is going to be distributed in digital coupons form.
Last Wednesday, Guangzhou’s Nansha District said that it will roll out about 10 million digital Yuan red packets that would boost catering and retail industries. Although there was no clarification about the issuing date yet announced.
A special economic zone in the southwest region of Beijing, Xiong’an New Area has started distributing digital Yuan red packets on Monday. Its plan is to let 50 million Digital Yuan out to boost consumption. Amidst the mass lockdown situation in April due to Covid outbreak, the Index of Caixin Purchasing Managers or Caixin PMI dropped to 36.2. This is perhaps the weakest performance that the service sector of China has seen in more than two years.
Li Keqiang, current Premier of China called for leaders in a video conference on Thursday, from all the levels including provincial, municipal and rural level that would speed up the infrastructural projects, give a boost to the jobs and restore overall growth.
Source: https://www.thecoinrepublic.com/2022/05/30/how-is-chinas-plan-to-drop-free-digital-yuan-effective-to-boost-lockdown-affected-economy/