Chinese Tech Giants Join CBDC Tests as Development Intensifies

The Chinese government is continuing to run tests and trials on its proposed national cryptocurrency. Now, the firm is extending participation in its tests to members of the private sector too. Recently, local news reports confirmed that the Chinese government had asked several top tech firms – including ride-hailing giant Didi and food delivery service platform Meituan Dianping – to join the asset’s test phase.

TikTok’s Dangerous Gambit

Meituan provides easy connections between individuals and businesses in the food space. The company currently has a user base that spans over five million local merchants and 240 million consumers. Another firm that will be joining is Bilibilibili, China’s largest video sharing site. However, one of the most notable participants is ByteDance, a multinational company that has video-sharing site TikTok under its umbrella. The platform has come under intense scrutiny of late, as its popularity has made it a target of smear campaigns and possible restrictions.

On Monday, United States Secretary of State Mike Pompeo told FOX News that Washington was considering banning TikTok and other Chinese apps. The speculation came on the heels of allegations that the Chinese government used TikTok to conduct surveillance and spread propaganda.

TikTok already went down in India, as the government recently banned almost 60 Chinese services from the country. The Indian ban was particularly difficult. Data from mobile insights firm Sensor Tower shows that the app has amassed about two billion downloads globally. 611 million of those downloads come from India.

The Indian government had accused TikTok and the other apps of deliberately harvesting user data and using them for profiling. Given the current political tensions between China and India as well, the move appeared prudent.

TikTok’s participation in China’s digital currency project could effectively jeopardize its reputation in the United States. Many see the upcoming digital Yuan as a threat to the dominance of the dollar and its status as the world’s reserve currency. While the U.S. government has given hints at a possible digital dollar, nothing concrete has materialized thus far.

Digital Yuan Update

The Trump administration has been decidedly against both cryptocurrencies and China. By choosing to align with both, TikTok is putting itself in danger of losing its second-largest foreign market, per the data from Sensor Tower. As for digital Yuan, work is ongoing per usual. Last month, Wang Zhongmin, the former vice-chair of the People’s Bank of China’s National Council for Social Security Fund, said that the government was through with designing the backend for the digital asset.

Wang made the statement at the online 2020 Fintech Forum, which was organized by the Tencent Fintech Research Institute and the Fintech 50 Forum in Beijing. He explained that the existence of so many cryptocurrencies caused the need to create a payment infrastructure that can effectively co-exist with other sovereign digital assets.

He added that China is currently in the testing phase of working the asset. While a launch date isn’t definite yet, they appear to be making steady progress.