China’s Digital Yuan Pushes Financial Inclusion to the Frontier of Central Bank Money

When the People’s Bank of China began piloting its central bank digital currency, the digital renminbi, or e-CNY, most observers assumed the project was primarily about payments efficiency, monetary sovereignty, or even geopolitical ambition. A new peer-reviewed study by Gregory T. Chin of York University, published in the journal Global Public Policy and Governance, argues that the picture is more surprising and, in some ways, more consequential. Drawing on pilot program records, central bank statements, and reporting from Chinese and international sources, Chin shows that the PBOC has deliberately steered the design of the world’s most advanced major-economy CBDC toward financial inclusion, targeting groups that traditional banking has long failed to reach: elderly citizens, residents of remote rural areas, and the unbanked poor in both villages and cities. In doing so, China has raced to the global lead on a technology that more than a hundred other central banks are still only exploring.

The technical architecture of the e-CNY helps explain why it can serve inclusion goals that conventional digital payments cannot. Unlike decentralized cryptocurrencies, the digital renminbi is a direct liability of the central bank, issued through a two-tier system in which the PBOC distributes the currency to commercial banks and licensed operators, who then place it in the hands of consumers and businesses. This structure preserves the role of existing financial institutions while giving the central bank a unified, state-backed digital cash instrument. The e-CNY is designed to pay for consumer retail and service transactions, civil servants’ wages, utility bills, and company-to-company exchanges, and it has been rolled out through large-scale pilots in cities including Shenzhen, Suzhou, and Shanghai, including lottery-style giveaways such as a three-million-yuan distribution in Suzhou that introduced millions of residents to the new wallet technology.

One of the most technically distinctive features of the e-CNY is its support for offline payment. In trials documented in Shenzhen, users could complete transactions in a ‘touch and pay’ mode even when neither device had network connectivity, using near-field communication between hardware wallets. This matters enormously for inclusion because network coverage, smartphone ownership, and battery life are precisely the barriers that exclude many vulnerable users from mobile payment systems. The PBOC and its corporate partners extended this logic to dedicated hardware: a ‘hard wallet’ card program was launched so that people without smartphones at all could hold and spend digital yuan, and Huawei’s Mate 40 series shipped with a built-in hardware wallet for the currency. Mu Changchun, the head of the PBOC’s digital currency research institute, has publicly framed the goal as providing an inclusive and easy-to-use digital central bank currency, a commitment the study treats as central rather than incidental to the project.

The rural dimension of this strategy is where the study’s findings become most vivid. China’s countryside has historically been underserved by bank branches, a gap that the Postal Savings Bank of China, with its vast network of rural outlets, has long worked to narrow. Pilot reporting from 2021 described tests of the digital yuan in villages, and analysts noted the introduction of a phone-free e-RMB card explicitly aimed at helping the rural poor. The policy context is the CCP’s longstanding ‘sannong’ agenda, referring to agriculture, farmers, and the rural countryside, which has made rural finance a recurring political priority. By pairing the e-CNY with card-based hardware and offline functionality, the PBOC effectively built a payment instrument that works for a farmer without a smartphone just as well as for an urban professional with the latest device.

Elderly citizens form the second major target group, and the design choices here are equally revealing. China’s aging population includes millions of people who find smartphone apps confusing or inaccessible, a problem that became acute as the country’s dominant private payment platforms made daily commerce increasingly app-dependent. The e-CNY’s hardware wallets, simple card interfaces, and offline modes offer a state-backed alternative that does not require downloading an application, managing a password, or maintaining an internet connection. The study emphasizes that the PBOC directed this design orientation during the pilot phase itself, meaning inclusion was not an afterthought bolted onto a finished product but a requirement shaping the engineering from the start. That is a notable departure from the pattern in many countries, where central banks treat inclusion as one consideration among many, and where private fintech innovation tends to serve the connected and creditworthy first.

Why would the world’s second-largest economy invest so heavily in a retail CBDC when it already has near-universal private mobile payments? Chin’s analysis points to a combination of motivations. Domestically, the e-CNY gives the state a payment rail it controls, reducing dependence on a small number of private platform companies and providing a public option in digital money. Internationally, Chinese policymakers and analysts have framed the project in terms of currency competition in the digital era and the long-term prospect of renminbi internationalization, although the study notes that the link between a retail CBDC and international currency status remains debated among Chinese economists themselves. There is also a standards dimension: China has proposed global rules for central bank digital currencies, positioning itself as a rule-shaper at the frontier of the technology rather than a follower.

The international spillovers are already visible. Hong Kong began allowing the digital yuan to be used in local shops in 2024, marking the first time the e-CNY crossed a border for everyday retail use. Chinese technology firms with deep telecommunications infrastructure across Africa have been identified by analysts as potential channels for digital currency adoption on the continent, and commentators have described China as leading Africa’s digital currency race. The Bank for International Settlements and the International Monetary Fund have both published extensive research on CBDCs as a potential new tool in the financial inclusion toolkit, and the e-CNY now serves as the most extensive real-world test case for the propositions in that literature. Agustín Carstens, the BIS general manager, has argued that the design of digital currencies touches on the very nature and soul of money, and China’s experiment is providing the empirical evidence for that debate.

The study also documents the scale and pace of adoption. PBOC governor Yi Gang reported in 2023 that e-CNY transaction volumes were seeing strong momentum, and by that point the pilots had expanded to dozens of cities across multiple provinces, covering payroll disbursements, transit, retail, and government services. The corporate ecosystem involved is broad: more than twenty companies were identified as participants in the underlying DC/EP development effort, spanning state banks, telecommunications operators, and technology firms. This public-private division of labor, in which the central bank owns the currency and the core ledger while partners build wallets, acceptance networks, and hardware, is itself a technical and institutional innovation that other central banks studying CBDC design are watching closely.

Still, the research is careful about limits and open questions. Rural adoption faces real challenges, including digital literacy gaps, merchant acceptance in low-density areas, and the persistence of cash preferences among some users, issues that Chinese industry reporting on the state of the e-CNY in rural areas has highlighted. The study does not claim that the digital yuan has solved financial exclusion, only that the PBOC has directed its design toward that goal with unusual seriousness. Whether offline cards, hardware wallets, and two-tier distribution can overcome the entrenched economics of rural banking remains to be seen, and the interplay between the e-CNY and the dominant private payment platforms is still evolving.

What the research ultimately establishes is that the global frontier of central bank digital currency is no longer theoretical. China has moved from concept to mass pilots to cross-border retail use, and it has done so with an explicit inclusion mandate for the elderly, the rural poor, and the unbanked. For the more than one hundred central banks now weighing their own digital currencies, the e-CNY offers the first large-scale demonstration that a CBDC can be engineered not just for efficiency or control, but as a deliberate instrument for bringing the financially marginalized into the formal economy. How well that engineering holds up in the villages and among the aging millions it was designed to serve will shape the next decade of monetary innovation worldwide.

Subject of Research: China's digital renminbi (e-CNY) central bank digital currency and its role in financial inclusion

Article Title: China’s ‘digital renminbi’ (e-CNY) as financial inclusion: the global frontier of central bank digital currency

Article References: Chin, G. T. (2025). China’s ‘digital renminbi’ (e-CNY) as financial inclusion: the global frontier of central bank digital currency. Global Public Policy and Governance, 5(1), 63-81. https://doi.org/10.1007/s43508-025-00112-0

Image Credits: AI Generated

DOI: 10.1007/s43508-025-00112-0

Keywords: central bank digital currency, digital renminbi, e-CNY, People's Bank of China, financial inclusion, China, offline payments, hardware wallet, rural finance, unbanked, monetary policy, fintech