China, which is the second biggest economy in the world, is currently facing an economic slowdown which was the result of Covid lockdowns. In order to revive its economy as well as for boosting economic slowdown, the Government of China has come up with a plan.
It has been decided by the Chinese Government that they should immediately give-away digital Yuan to general public under red envelope offering. Government is expecting that local consumption can spontaneously be bolstered which slowed down due to country-wide lockdowns for preventing spread of Covid-19 pandemic.
Red Envelop Offerings
In the initial phase of offering, red envelopes will be offered to the citizens living in the areas of Xiongan, Guangzhou and Shenzhen. Digital Yuan equivalent to US$ 4.5 Million (approximately 30 million digital Yuan) have been reserved by the Chinese Government for the offering. Each individual who wishes to avail the offer would be required to participate in the lottery.
In the lottery each individual would have the right win a maximum of 128 Yuan or 100 or the lowest digital prize money of 88 digital Yuan. According to a confirmed news report from China, the offering will be launched from the coming Thursday.
Red envelopes which are also widely known as ‘red packets’ in China, is centuries old traditional actively followed by Chinese people. In this tradition, gifts are exchanged by Chinese people amongst their family and friends. The gifts can further be in the shape of monetary gifts as well.
Since the digital Yuan is controlled and issued by the Peoples Bank of China, therefore, the distribution amongst general public is authorized by the bank as well. In fact the bank distributes digital Yuan as ‘digital coupons’ which are designed to be earned by individuals.
Guangzhou Launches Distribution
In this pretext, one of the districts in Guangzhou had made an announcement past week informing that they have kept 10 million digital Yuans in reserve. The authorities there have further informed that the said digital money will be utilized towards revival of industries relating to retail sector and catering.
However the district authorities haven’t yet specified the date of disbursement which shall be announced in due course. Guanzhou is one of the first cities in China where digital Yuan is accepted as payment against services rendered by several hospitals.
Xiongan, which is an area earmarked as economic zone and located in Beijing, has already commenced distribution of Red Envelopes.
When lockdowns were put in place again in the past month, it adversely impacted upon the Caixin Purchasing Managers’ Index. As a result of the impact, the index dropped at an alarming level of 36.2. By far this was the lowest score the Index recorded ever throughout its performance history.