China extends digital yuan test to Beijing as Shenzhen holds second lottery

China’s digital yuan testing has extended to the capital, Beijing, after months of testing in other major cities. According to local news outlets, the pilot test of the central bank digital currency (CBDC) will focus on small local enterprises initially.

The CBDC, alternatively known as the digital currency electronic payment (DC/EP), has been in testing phase in Shenzhen, Suzhou, Xiong’an New Area and Chengdu. As CoinGeek reported in November, the People’s Bank of China was targeting Beijing for its next pilot test—set to be the biggest one yet.

The trial started on December 29, with the focus initially being on small retail payments, according to local news outlet PanDaily. Unlike in the other cities where the PBoC has sought to partner with large companies, the Beijing trial started off with small local companies.

One of the first to partner with the PBoC was Mancat Coffee, a small local coffee shop in Lize Financial Business District. The shop’s customers can scan a payment QR code to pay for their coffee in digital yuan.

As one Chinese journalist pointed out on Twitter, Beijing has some global coffee chains including Starbucks, Costa and Luckin. However, the PBoC chose to partner with a “small, low-end, low-grade local coffee shop,” showing the bank’s focus on inclusion and growing the local economy.

DCEP (Chinese Digital Currency) disclosed its first landing scene in Beijing for the first time: a coffee shop called Mancat Coffee. It has been tested in Shenzhen, Suzhou, Chengdu and other places before. The per capita consumption is about $6. pic.twitter.com/nh978IJXe7

— Wu Blockchain (@WuBlockchain) December 29, 2020

As the Beijing trial starts, the city of Shenzhen is set to conduct its second digital yuan lottery. In its first lottery, the tech city awarded 200 digital yuan ($30) to around 50,000 residents. They could use the DC/EP to make payments in over 3,300 stores within the city.

In the second trial, the city is set to double the giveaway to $3 million. In a notice announcing the lottery, the city’s government announced that it’s giving away 100,000 red packets worth $30 each to its residents.

Lottery winners will be able to spend the funds on January 7 – 17. In this trial, residents will be able to spend the digital yuan in over 10,000 stores, over three times the number in the first trial.

The latest lottery comes just after Suzhou city completed a similar trial last month. The city revealed that 96,614 residents had received the digital yuan, spending most of it on local stores. Figures from the Suzhou government indicate that offline stores received 55% of the transacted amount. Popular online retailer JD.com received the rest of the funds.

The Suzhou test was the most advanced yet, allowing residents to make ‘tap payments’ offline. However, Beijing residents will not access this feature as per local outlet Beijing Business Today. The outlet claims that the PBoC discovered some bugs in the tap payments feature and disabled it for the Beijing test.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain