China aims to use its CBDC to rival Alibaba and Tencent

The People’s Bank of China (PBoC) seems to be planning to use its digital currency electronic system (DCEP) to compete with tech giants like Alibaba and Tencent, as per a Financial Times report. 

A few days back, the central bank reportedly prompted an antitrust agency to launch a probe against Alipay and WeChat Pay for exercising their dominance to stifle competition. According to FT, even the executives of Alibaba’s financial group Ant agreed that the Chinese central bank would target the market dominance of Alipay and WeChat pay. 

At present, Alibaba’s financial subsidiary Alipay and Tencent’s WeChat Pay, dominate most of the digital payments sector in China. In Q1 of 2020, Alipay processed almost 56% of all mobile payments in China. According to Financial Times, PBoC plans to use the DCEP to provide banks with equal opportunities in the digital payments sector as it earlier did to technology giants. 

As per a Cointelegraph report, the head of Asian economic research at a major international bank said that Zhou Xiaochuan, ex PBoC governor, had allowed Alipay and WeChat Pay “to grow into monsters” despite receiving complaints from local banks and the China Banking Regulatory Commission. 

Back in March, several reports had suggested that Alibaba and Tencent were an active part of the digital yuan project. Nevertheless, a South China Morning Post report from last month noted that China launched its digital currency as an alternative payment option for Alipay and WeChat Pay. Cointelegraph also stated that China had not listed these two tech giants as participants of the digital currency project.