What Happened: Shanghai has officially kicked off its second annual “Double Five” shopping festival on the first day of Labor Day. The shopping festival, which is similar to the country’s popular Singles’ Day, was launched in May last year by the Shanghai Municipal government to boost local consumption in the wake of the COVID-19 pandemic. In 2020, it generated over $77 billion (500 billion yuan) in online and offline sales.
Yet, this year’s gala will be on an even bigger and better scale. That is because the cities of Shanghai, Suzhou, and Jiaxing jointly organized the “Double Five” shopping festival, launching the third round of its digital renminbi trial by issuing red envelopes and bank discounts totaling over 50 million yuan in value. It’s a project that unveils a cross-province, multi-domain consumer payment system.
The Jing Take: Since last year, many cities like Shenzhen, Beijing, and Shanghai, have carried out pilot trials of Digital Currency Electronic Payment (DCEP), owned by China’s State Bank. The country currently has the world’s most advanced mobile payment structure, dominated by WeChat and Alipay. Yet, the digital renminbi will help the Chinese government strengthen its control over the financial system and reduce the monopolies of digital payment systems. The new form of payment will also track transactions in real-time and curb laundering, illegal gambling, and corruption.
According to The Wall Street Journal, Beijing has added expiration dates to its digital currency, which encourages users to spend it quickly or during times of economic tension. Many believe the new payment method will further smooth transactions and boost domestic consumption. Given that, we should expect China-dependent luxury brands to embrace the digital yuan, which will allow them to cater to consumer shifts with little resistance.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
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