The Chinese government plans to increase the international activity of the Shanghai Special Economic Zone by connecting it to the central bank digital currency (CBDC) testing. By 2027, the digital yuan (e-CNY) will be used in cross-border trade and fiscal programs implemented in the Pudong area.
The Chinese Communist Party Central Committee published a five-year development plan for the Pudong New Area of Shanghai. According to the plan, the area will become an international trade hub by 2027 and expand the CBDC pilot program.
The five-year development plan for the Pudong area includes:
- establishing a commercial mediation system that complies with international standards;
- simplifying customs procedures;
- improving supply chain management through local port facilities, nearby free trade zones, and Shanghai Pudong International Airport;
- upgrading educational and medical institutions that will attract foreign talent for research and cutting-edge development.
In addition to transforming Pudong into an international trade hub, the initiative will significantly expand the digital yuan (e-CNY) project. The Chinese government plans to use the CBDC for all financial transactions in the area, including:
- trade settlements;
- e-commerce payments;
- carbon credit payments;
- green power trading;
- in the use of fiscal funds.
In 2023, the e-CNY pilot project gained international status. The PRC authorities approved the CBDC for securities market transactions, the Bank of China used the digital yuan to buy precious metals for the first time, and the Suzhou municipality started using the e-CNY to pay for services related to cross-border railway transportation. Three international banks and one of the UK’s largest banks joined the e-CNY pilot testing.
