The world’s second largest economy, China, has launched free digital yuan “red packets” in a bid to boost local consumption to recover from China’s economic slowdown due to mass Covid lockdowns. The trial will be issued in the cities of Shenzhen, Guangzhou, and Xiongan New Area.
As a part of this launch, Shenzhen will give out 30 million digital yuan (US$4.5 million) from Thursday onwards. As per local media, the give-out will be through a lottery system that gives residents an opportunity to win 88, 100, and 128 yuan red packets.
Red packets are typically monetary gifts in red envelopes that are gifted on special occasions. However, for China’s central bank digital currency (CBDC), also known as the e-CNY, the red packets are distributed as digital coupons.
The Nansha District of Guangzhou had announced last week that it will issue 10 million in digital yuan red packets to bolster catering and retail industries. However, the date of issue hasn’t been announced yet. The hospitals from this region had already witnessed the use of digital Yuan as reported earlier.
Xiongan New Area, which is a special economic zone southwest of Beijing, has started distributing red packets on Monday, as per reports. The effort is a part of its 50 million yuan plan to encourage consumption.
In April, the Caixin Purchasing Managers’ Index (Caixin PMI) had dropped to 36.2 in the midst of country-wide lockdowns during the Covid outbreak. This has been the weakest performance for China’s service sector in more than two years.
As a result, in a nationwide video conference, Chinese Premier Li Keqiang asked leaders to accelerate infrastructure projects, boost jobs and restore growth.
