Authorities in the People’s Republic of China have allocated 100 million yuan ($13.7 million) to establish and develop the country’s first industrial park in the Luohu district of Shenzhen, Guangdong province, as part of support for the central bank digital currency ecosystem (CBDC).
China has opened the country’s first industrial park to support the digital yuan (e-CNY) pilot project. Local media reports that the government has allocated substantial funding for the development of the CBDC ecosystem in Guangdong province.
The fund to support the development of the digital yuan ecosystem in the Luohu district of Shenzhen is 100 million yuan (~$13.7 million). The funds are earmarked for a plan to be implemented over the next three years. The plan includes ten initiatives to stimulate the development of the local e-CNY ecosystem, among which are:
- simplifying payment solutions across industries;
- encouraging the use of blockchain-based smart contracts;
- integrating hardware wallets with smart devices;
- facilitating e-CNY transactions.
According to Huang Tuo, Head of the Luohu financial services department, expanding the CBDC usage opportunities for financial companies in the region will create a new industrial cluster model within the local digital economy.
For companies willing to relocate to the park area or set up a representative office there, the plan provides:
- no rent for premises for three years;
- financing of up to 20 million yuan (~$2.7 million) for commercial banks;
- financing of up to 50 million yuan (~$6.9 million) for startups;
- loans at favorable rates for all companies.
At the time of the park’s official opening, nine local major technology and finance companies, including Tianyu Information Ltd and Lakala Payment Co Ltd, had announced their willingness to participate in the initiative.
Zeng Zhaoxiang, Deputy Director of Tianyu Information, said the Luohu district has the potential to take a leading position within the e-CNY usage framework. He added that extra incentives from the government and the opening of the industrial park will attract a large number of blockchain experts and talented programmers to Luohu.
The e-CNY pilot project was launched in 2019, and the testing of China’s CBDC in a real environment started in 2022. As early as mid-year, over 4.5 million merchants began accepting the digital yuan as payment. By the end of the year, the volume of the e-CNY in circulation amounted to ~$2 billion. In 2023, thanks to integration with WeChat, access to CBDCs was opened to about half of the PRC population, and the amount of e-CNY transactions reached ~$249.33 billion. At the same time, the country’s authorities began testing the e-CNY as part of cross-border transfers and for transactions in the securities market.