China is expanding its digital currency program with a trial at the Hainan Lu Xun Middle School. China launched its Central Bank Digital Currency (CBDC) ahead of the Winter Olympics in Beijing, and is now conducting pilots in several regions throughout the country.
The Middle School trial, however, entails much more than digital payments. Chinese administrators are essentially outfitting students with SIM cards that double as payment cards and student IDs. Those SIMs are then placed in the feature phones that students are permitted to keep with them when they go to school.
In that regard, students in China are not allowed to take modern smartphones into the classroom in lower and middle grades. Instead, they are only given a feature phone that can be pre-loaded with the numbers of three family members for emergency dialing.
The new CBDC SIMs will give those phones more features without turning them into full-fledged smartphones. Most notably, the SIMs will enable NFC payments in the digital currency at campus stores, and at select off-campus merchants that have the school’s approval. The SIMs will also have a GPS utility that allows administrators and parents to track a child’s location.
The CBDC SIM cards are a collaboration between China’s ICBC bank and China Mobile. Parents can add funds to their child’s digital currency wallet, and can view a purchase history that lets them know where their children have been spending money. Privacy advocates have argued that the new cards represent an invasive form of social control, although that is unlikely to slow the rollout of the program.
The Middle School trial is not the only CBDC project currently in the works in China. One initiative in the Hainan Free Trade Port region will allow consumers to prepay for select goods and services in a manner that will stabilize revenue streams for merchants. Another M-CBDC Bridge project will extend the CBDC utility to Hong Kong, Thailand, and the United Arab Emirates. Chinese card manufacturers like Union Smart, Goldpac Group, and Chutian Dragon are already working to create biometric payment cards for use with the country’s CBDC scheme.
Sources: Ledger Insights and Central Banking