50,000 Shoppers Give China’s Digital Yuan Its Biggest Test Yet

Tens of thousands of Chinese this week spent digital yuan at Walmart, gas stations and convenience stores across the southern tech hub of Shenzhen. The experiment -- unprecedented in scope and size -- went off without a hitch, catapulting the world’s No. 2 economy to the forefront of a race to develop virtual money.

The real-world test is thus far the largest in terms of users and money involved since the Chinese central bank kicked off testing of its digital cash in a handful of cities in April. The government in Shenzhen handed out 10 million yuan ($1.5 million) of the new money -- dubbed Digital Currency Electronic Payment, or DCEP -- to 50,000 randomly selected citizens through lucky draws on the currency’s wallet app. Each winner gets 200 yuan to spend at more than 3,000 retail outlets spanning one of the city’s buzziest districts.

The giveaway, coming the week of President Xi Jinping’s visit to Shenzhen, marks the biggest step in Beijing’s ambition to keep up with -- and control of -- its rapidly digitalized economy and potentially bolster the yuan’s status as a global currency. A digital yuan will have wider implications for an economy already comfortable with cashless and mobile transactions, an arena now largely controlled by Alibaba Group Holding Ltd.-backed Alipay and Tencent Holdings Ltd.’s WeChat.

The trial shows “they are ready for the full launch of its digital currency very soon,” said Charles d’Haussy, who heads the Hong Kong office for blockchain engineering venture ConsenSys.