The globalization of the digital yuan depends on the extent to which other countries welcome a currency controlled by the Chinese central bank, and the restrictions that may be imposed on its use.
The completion of the experiments to issue the Chinese central bank’s digital currency coincides with the launch of the Coronavirus vaccine, the easing of travel restrictions in many countries, and the emergence of signs of recovery in the severely affected tourism sector.
In a report published by the American "National Interest" magazine, writer Francis Chen says that if the cloud of the epidemic breaks and global tourism flourishes, this will push the digital yuan to the forefront of the global financial scene.
In his view, Chinese foreign tourism could be an effective way to internationalize the digital yuan and enhance its value enough to challenge the US dollar as the world's dominant currency.
Since the global financial crisis that broke out in 2008, China has worked to support the use of its currency abroad in order to crowd out the US dollar, but it has faced great obstacles - as the writer says - especially because of the strict controls imposed by the Chinese government on the currency.
The dominance of the dollar in Asian supply chains has continued over the past years, accounting for nearly 80% of international transactions by Asian banks in the third quarter of 2019.
Currently, China is betting on the digital currency issued by the central bank and fully supervises it, and the digital yuan appears more suitable for global use and more able to compete with the dollar, in case the People's Bank of China (the central bank) allows it to be used abroad.
But the globalization of the digital yuan depends on the extent to which other countries welcome a currency controlled by the Chinese central bank, and the restrictions that may be imposed on its use.
Tourism in the service of the digital yuan
Chinese tourists abroad are expected to become ambassadors of the new digital currency, and the Chinese government has announced that it intends to officially issue the digital yuan during the Beijing Winter Olympics in 2022, and Chinese tourism abroad appears to be the most powerful way to encourage its use globally before the official issuance.
In fact, Chinese tourism is the largest tourism sector among all countries of the world, and the Chinese government is aware of this advantage, and has previously used it as an economic pressure tool against Taiwan.
China may resort to using this weapon against other countries that receive large numbers of Chinese tourists, to pressure them to accept dealing in the digital yuan, especially in light of the expected recovery in the tourism sector during the coming period.
Some sellers who deal with Chinese tourists in a number of countries use the "Alipay" electronic payment platform, and the application "Alipay" and "WeChat" is expected to play an important role in promoting the digital yuan, and the People's Bank of China can expand The scope of its currency to be used abroad by relying on these two applications already spread.
In the event that the central bank approves the external use of the digital currency, it is likely that the countries of Southeast Asia will be the first to deal with it due to their heavy dependence on Chinese tourists.
Given Europe's increasing dependence on Chinese tourism, European countries may in turn accept dealing in the digital yuan, which would enhance China's financial influence on a global level and contribute to undermining the dominance of the dollar.
In 2019, the number of Chinese tourists abroad reached record rates, reaching about 170 million tourists, and the most popular tourist destinations were Thailand, Japan and Korea, and in the same year, the number of Chinese tourists in Europe increased significantly.