The Digital Yuan Abroad: Pilot Projects in Belt and Road Countries
Testing China’s CBDC in cross-border trade corridors from Asia to the Middle East.
✍️ Liang Chen – Financial Journalist with fintech coverage expertise
Taking the Digital Yuan Overseas
China’s central bank digital currency (CBDC), known as the digital yuan (e-CNY), has moved from domestic pilots into the global arena. After years of testing in Chinese cities, the People’s Bank of China (PBoC) is now trialing cross-border use cases in collaboration with Belt and Road Initiative (BRI) partners.
The aim is to test whether the digital yuan can serve not only as a domestic payment tool but also as a currency for international trade settlements, reducing reliance on the U.S. dollar in strategic corridors.
Pilot Projects in Asia
Hong Kong has become the most advanced testing ground for the digital yuan’s international use. The mBridge project, led by the Bank for International Settlements and central banks of China, Hong Kong, Thailand, and the UAE, is experimenting with real-time CBDC settlements.
For Chinese exporters and Southeast Asian importers, this promises faster, cheaper payments without the need for SWIFT intermediaries. Early tests showed cross-border transactions processed in seconds instead of days.
Other pilots in Laos and Cambodia are exploring the use of the digital yuan in tourism and retail, where Chinese visitors can pay directly with e-CNY apps.
Middle East and Africa
Beyond Asia, China is quietly extending digital yuan pilots into the Middle East and Africa, regions where Chinese firms dominate infrastructure and resource projects.
For example, energy trade contracts between Chinese state firms and Middle Eastern suppliers are being studied as candidates for digital yuan settlement, reducing exposure to currency fluctuations. African BRI partners are exploring whether digital rails can cut costs for remittances and trade financing.
Strategic Goals
The push abroad reflects China’s broader strategy:
- Monetary sovereignty: Reduce dependency on the U.S. dollar for critical trade.
- Trade efficiency: Lower transaction costs for exporters and importers.
- Technology leadership: Establish China as the pioneer in real-world CBDC adoption.
This is not an attempt to replace the dollar overnight, but rather to chip away at its dominance in niches where China already has trade influence.
Interplay with Other Digital Tools
The digital yuan’s rollout coincides with the rise of other digital settlement instruments. While the e-CNY is state-led, private fintech pilots have tested reserve-backed tokens for cross-border payments in niche corridors.
Together, these systems highlight a future where multiple digital rails — some state-backed, others market-driven — coexist, offering businesses flexibility in international transactions.
Global Reactions
The international reception has been mixed.
- Emerging markets see potential benefits in faster, cheaper transactions.
- Western governments worry about the strategic implications, fearing the digital yuan could erode dollar dominance and give Beijing new tools of financial influence.
The U.S. has stepped up research on its own digital dollar, while Europe debates how quickly to push the digital euro.
Challenges to Scale
Despite its promise, the digital yuan faces significant challenges:
- Adoption hurdles – Foreign businesses may hesitate to adopt a politically sensitive currency.
- Technical barriers – Integration with legacy banking systems is complex.
- Trust issues – Concerns remain over surveillance and data privacy.
Without addressing these, the e-CNY’s role abroad may remain limited to niche corridors rather than mass adoption.
Outlook: A Multipolar Currency Future
The digital yuan’s international pilots represent the first real-world tests of a CBDC beyond borders. Success could establish China as the standard-setter for digital money in trade, especially along Belt and Road routes.
For now, its role is complementary rather than dominant — a parallel track alongside dollars, euros, and private stablecoins. But as the digital economy expands, China’s CBDC experiments abroad could shape the rules of the next era of global finance.
