Report Claims China’s Digital Yuan Has “Failed,” Impacting Xi Jinping’s Authority

A controversial report has labeled China’s digital yuan initiative a “failure,” suggesting the project reflects waning authority for President Xi Jinping. Published by the Epoch Times, a media outlet critical of the Chinese Communist Party (CCP), the report connects the project’s struggles to internal dissent and corruption allegations.

Key Figures and Allegations

At the center of the report is Yao Qian, once the mastermind behind China’s digital yuan efforts. Yao, formerly the director of the Digital Currency Research Institute, was instrumental in shaping the Central Bank Digital Currency (CBDC) landscape in China. However, Yao’s expulsion from the CCP earlier this month, on charges of accepting crypto-related bribes and forging illicit deals with tech firms, has cast a shadow over the project.

The report portrays Yao’s fall as a pivotal blow, with the Epoch Times claiming that his ouster signals deeper issues. The project, initially touted as a revolutionary step in global finance, is now characterized by Beijing as merely a “supplement” to existing payment systems.

A Shift in Official Rhetoric

China initially championed the digital yuan as a groundbreaking financial tool, capable of rivaling payment giants like Alipay and WeChat Pay while offering Beijing tighter monetary control. However, the project has struggled with low adoption rates.

The CCP has avoided setting a firm timeline for the digital yuan’s widespread rollout. Pilots in cities across mainland China and Hong Kong have expanded, but enthusiasm has waned. A mainland Chinese publication, The Paper, raised questions last year, asking, “Why are so few people using it?”

A poll conducted on the social platform X found that 90% of respondents had never encountered or used the digital yuan. Such reports suggest that public interest in the project has dwindled significantly, despite Beijing’s international promotion efforts.

Epoch Times’ Criticism

The Epoch Times argues that Beijing’s recent rebranding of the digital yuan as a supplementary payment tool reflects an acknowledgment of failure. The publication suggested that this shift marks a retreat from the project’s initial ambitious goals, which included reshaping consumer finance and bolstering China’s economic influence.

“Previously, Beijing claimed the digital yuan would change people’s lives,” the outlet wrote. “Now it claims the digital yuan is a supplement. Isn’t this an admission of failure?”

Context: Political Implications

The digital yuan was closely associated with Xi Jinping’s vision for technological innovation and economic dominance. Its faltering progress, coupled with Yao’s scandal, is being framed as a symbol of internal resistance to Xi’s leadership within the CCP.

The Epoch Times hinted at possible sabotage from factions within the CCP, claiming there may be influential figures in Beijing who are resistant to the project’s success.

Could BRICS Revive the Digital Yuan?

Despite setbacks, there remains speculation about the digital yuan’s potential role in BRICS economic initiatives. Some observers argue that the digital currency could still serve as a pivotal tool for de-dollarization in trade among BRICS nations. However, its domestic struggles raise doubts about its effectiveness on a global stage.

While Beijing continues to face challenges, the future of its CBDC project will depend on its ability to rebuild trust, innovate effectively, and address both technical and political hurdles.