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Digital currencies
TechPolicy

China’s digital currency will not compete with mobile payment apps WeChat and Alipay, says programme head

  • Currency issued through DCEP can be used in mobile wallets like WeChat Pay, says Mu Changchun, head of the central bank’s digital currency research institute
  • The People’s Bank of China has already found counterfeit digital yuan wallets, Mu says

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China’s southern tech hub of Shenzhen concluded the country’s largest test of the sovereign digital currency this month after giving out 10 million yuan in red packets. Photo: Bloomberg
Coco Fengin BeijingandMasha Borakin Hong Kong

China’s Digital Currency Electronic Payment (DCEP) will not compete with WeChat Pay and Alipay, the head of the programme clarified for the first time on Sunday. The two digital wallets had a combined 94 per cent share of the country’s mobile payments industry in the second quarter, according to iResearch.

“They don’t belong to the same dimension. WeChat and Alipay are wallets, while the digital yuan is the money in the wallet,” said Mu Changchun, the head of the research institute for digital currency at the People’s Bank of China. He spoke in Shanghai at the 2nd Bund Summit, co-organised by the China Finance 40 Forum.

However, the digital yuan is distributed through an app that some consumers may choose to use instead of private mobile wallets, according to Wang Leilei, a fintech consultant at the Shanghai-based financial industry consultancy Kapronasia. She said participants of a pilot run in Shenzhen earlier this month were asked to download a specific app for DCEP.

“If the digital money is to be allocated through the app, some people may switch to the app, while others may transfer it to WeChat or Alipay. It depends on consumers and the use case,” Wang said.

Alipay is owned by Ant Group, an affiliate of Alibaba, which owns the South China Morning Post.

Mu Changchun, the head of the People’s Bank of China’s research institute for digital currency, at the 2nd Bund Summit. Photo: 2020 Bund Summit
Mu Changchun, the head of the People’s Bank of China’s research institute for digital currency, at the 2nd Bund Summit. Photo: 2020 Bund Summit

However people decide to use the new digital yuan, though, it still faces an age-old problem similar to cash: counterfeiting.

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