Every Tuesday, hundreds of millions of people in Chinese cities use WeChat Pay or Alipay on their phones to pay for things like subway rides, rent, and noodles without thinking twice. The infrastructure is faster than the majority of payment systems worldwide, seamless, and deeply embedded.
The People’s Bank of China spent ten years attempting to bring something new into this environment: the e-CNY, a digital currency issued by the government that would provide Beijing with direct access to the financial lives of its citizens and, eventually, anyone conducting business in renminbi anywhere in the world. Ten years later, the e-CNY makes up about 0.2 percent of all payments made in China. WeChat is far superior to the device they created to compete with the dollar.
| Topic | Central Bank Digital Currency (CBDC) Race — China vs. United States |
|---|---|
| China’s CBDC | e-CNY (digital yuan) — launched as pilot program; redesigned in early 2026 to function as digital deposits rather than true CBDC |
| China’s CBDC Issuer | People’s Bank of China (PBOC) |
| e-CNY Transaction Volume | ~3.5 billion transactions; 16.7 trillion yuan (~$2.4 trillion) cumulative as of November 2025 — but only 0.2% of total Chinese payments |
| US CBDC Status | No CBDC issued; Trump signed executive order banning work on a digital dollar |
| US Digital Currency Strategy | Promoting private stablecoins via the GENIUS Act (signed July 17, 2025 by President Trump) — forbids interest payments on stablecoins |
| Stablecoin Market | 97% of all stablecoin market cap is USD-denominated |
| Cross-Border CBDC System | mBridge — includes China, Hong Kong, Thailand, UAE, Saudi Arabia; only 4,047 transactions totaling ~$55 billion to date |
| Key Policy Concern | China’s e-CNY gives PBOC full surveillance of all transactions; privacy implications for foreign users |
| Key Analyst | Darrell Duffie, Stanford GSB — warns against rushing a US response but acknowledges China’s strategic ambitions |
| Reference Website | Peterson Institute for International Economics — China Gives Up on State-Backed Digital Cash |
The majority of Western observers did not anticipate that narrative. For years, the story went something like this: China is leading the world in digital currency, the US is hesitating, and the dollar’s hegemony could be undermined if Washington doesn’t act swiftly. In September 2021, a version of that story appeared in Time magazine, which described the United States as “losing the global race to decide the future of money.”
China’s digital currency initiative, according to Kevin Warsh, Donald Trump’s nominee to lead the Federal Reserve, “threatens the dominance of the US dollar.” There was and, to some extent, still is anxiety. However, the e-CNY’s actual performance compels a closer examination of whether the threat was ever as real as the alarm indicated.
One of the first significant economies to openly pursue a CBDC was China, which committed to the digital yuan in January 2016. The PBOC created a two-tier system in which consumers hold digital yuan in wallets on their phones, commercial banks and payment platforms distribute it, and the central bank issues it. It was a good theory. Promotions, free digital yuan giveaways, merchant recruitment, and a prominent showcase at the 2022 Beijing Winter Olympics were all part of the rollout.
Despite being a part of one of the world’s most advanced digital payment systems, Chinese consumers largely shrugged. WeChat and Alipay were already used by hundreds of millions of people. Nothing that those apps couldn’t do was accomplished by the e-CNY. When compared to the 1.3 quadrillion yuan that flow through current digital platforms in a single year, the PBOC’s reported cumulative transactions of nearly 3.5 billion seem impressive.
The redesign in February 2026 was instructive. In essence, China’s central bank abandoned the digital cash model that initially distinguished it from private-sector digital wallets by discreetly restructuring the e-CNY so that it would no longer operate as a true central bank liability. The money will now be held and interest will be paid by commercial banks rather than the PBOC.
The new version is no longer a CBDC by many standards. This was openly acknowledged by the Peterson Institute for International Economics, which noted that no major economy has actually implemented a working retail CBDC and that the risks to monetary faith are severe enough to cause even ambitious central bankers to reconsider.
Nearly the opposite course has been followed by the United States. While simultaneously supporting private-sector stablecoins through the GENIUS Act, which was signed into law in July 2025, Trump issued an executive order expressly prohibiting work on a digital dollar. The reasoning behind this is that dollar-backed stablecoins, which currently account for 97% of the global stablecoin market by value, project dollar reach without requiring the government to construct or oversee the infrastructure.
According to the administration, allowing private businesses to issue digital currency denominated in dollars will more successfully establish reserve currency status than a government alternative. That might be the case. There is currently no clear solution to the question of whether lightly regulated private stablecoins introduce systemic risks that a government-backed instrument would avoid.
Domestic efficiency isn’t the main goal of China’s digital currency strategy. WeChat already manages domestic payments effectively. Reducing reliance on SWIFT and the dollar-based financial system, which enables Washington to impose severe sanctions on enemies, is the strategic objective. For this reason, China launched CIPS, its own interbank payment system, in 2015.
The same idea is extended by the e-CNY’s cross-border infrastructure, such as the mBridge system that connects China, Hong Kong, Thailand, the United Arab Emirates, and Saudi Arabia. However, mBridge has processed about 4,047 transactions totaling about $55 billion. To put things in perspective, SWIFT completes that in less than a day.
All of this has a surveillance component that is much more important but receives less attention than the geopolitical framing. Every e-CNY transaction linked to actual identities is visible to the PBOC, and Chinese security services have on-demand access to the complete data. This is just the financial reality of living in an authoritarian state for Chinese citizens living domestically.
As was briefly shown during the Beijing Olympics, it represents a significant privacy risk that most governments haven’t fully addressed for foreign companies and tourists who might one day conduct business in digital yuan.
Even though the “race” framing is attention-grabbing, it’s difficult to look at the entire image without feeling that it somewhat obscures what’s truly going on. China created something, but it is having trouble getting its own people to use it.
The US is betting on private markets and has outlawed the official version. As of yet, neither nation has proven that its model is effective on a worldwide scale. The outcome will depend more on which ecosystem proves to be more reliable, practical, and resilient when put to the test by the next financial crisis than on which government moves more quickly. The true competition might not be resolved for another ten years.
