China matters highlighted.
The year was 2014 when China’s banking sector shook hands on a private banking license deal with the country’s Big Tech giants like Alibaba and Tencent among others.
This is when digital payments system including Alipay and WeChat, was born. But little did we know about a digital currency from the People’s Bank of China (PBoC) that started its trajectory in the same year.
Also known as the Central Bank Digital Currency (CBDC), it’s now tipped to be the next digital currency revolution, possibly ushering in digital payments 2.0 in China. But why is this important for the world’s second-largest economy.
In the digital economy, China advanced significantly in two key areas. Chinese society as a whole was the first to adopt e-commerce. Less than 1% of worldwide e-commerce in 1999 came from China. But as of right now, nearly 52% of all e-commerce worldwide is conducted in China.
China is also the first nation in the world where the volume and value of e-commerce exceeds that of traditional retail. 2021 estimates that 52.1 percent of retail in China is conducted online, compared to 15 percent in the US and 20 percent in Indonesia (2020).
The second is that China’s fintech solutions are designed with financial inclusion in mind. A “cashless society” was unheard of twenty years ago. China transitioned from a cash-based to a cashless society, skipping the entire credit card generation. Currently, 90% of people live in urban regions.
China’s successful development of its digital economy has several distinctive characteristics that may be difficult for other emerging nations to replicate. Nevertheless, China’s example best exemplifies the potential of the development of the digital economy as a catalyst for the eradication of poverty and the revitalisation of rural areas, even at a relatively low stage of development and under flawed or insufficient initial circumstances.