Following Tianjin's designation as an e-CNY pilot city in April 2023, this implementation aligns with the city's "14th Five-Year Plan" for financial development, which actively promotes digital currency ecosystem construction. Tianjin's robust digital economy infrastructure and fintech advantages provide an ideal testing ground for this innovation.
Digital Yuan – Empowering the Digital Economy
The Digital Yuan is a digital form of legal tender issued by the People's Bank of China, representing the digital incarnation of the renminbi (RMB).
The Digital Yuan (e-CNY) enjoys the same legal status as physical RMB, both serving as the nation’s legal tender backed by sovereign credit. Under applicable conditions, no entity or individual in China may refuse acceptance. The Digital Yuan is equivalent to banknotes and coins, allowing 1:1 bidirectional exchange. It supports offline transactions and features 'payment-finality settlement.' Additionally, the Digital Yuan incorporates blockchain-inspired technology, enabling full traceability while maintaining 'controlled anonymity.'
As such, the Digital Yuan (e-CNY) effectively addresses three critical limitations of traditional currency—weak traceability, homogeneity, and lack of real-time processing—serving as a vital complement to existing payment systems and further enhancing the transmission efficiency of monetary policy.
Simultaneously, the Digital Yuan will act as a catalyst for digital financial development. Leveraging features such as payment-finality settlement and loosely coupled accounts, it provides an effective solution for closed-loop fund flow monitoring, a core requirement in supply chain finance scenarios.
Furthermore, as a critical enabler of the digital economy, the Digital Yuan (e-CNY) serves as a data nexus driving the integration of digital and real economies. It empowers enterprise digital transformation, accelerates the development of industrial internet ecosystems, and meets the digital payment needs of the general public.
Smart Contracts – Enabling Targeted Payments
In the application scenarios of the Digital Yuan, smart contracts will play a pivotal role.
Smart contracts are computer protocols that digitally facilitate, verify, or enforce the negotiation or performance of contracts. As a core blockchain technology, smart contracts operate on what is essentially a distributed public ledger, where all transactions are transparently recorded and immutable. Consequently, smart contracts exhibit characteristics such as automation, decentralization, tamper-resistance, and enforceability.
By incorporating smart contracts, the Digital Yuan (e-CNY) achieves programmability, enabling precise control over fund flows and designated usage.
Smart contracts allow trustless transactions without third-party involvement—all transactions are traceable and irreversible. From a user perspective, smart contracts function as automated escrow accounts that release and transfer funds only when predefined conditions are met.
Empowering Supply Chain Finance – Reinforcing Intelligent Risk Control
Leveraging blockchain technology and smart contracts, the Digital Yuan (e-CNY) records all transactions on-chain, ensuring each step is fully traceable and immutable. This enables supply chain finance providers to accurately verify the authenticity and legitimacy of SME transactions, achieve end-to-end fund flow monitoring post-loan issuance, and utilize smart contracts to enforce predefined usage conditions—effectively eliminating fund misappropriation or diversion. These capabilities fundamentally safeguard lenders' capital while providing verifiable proof of transaction authenticity for SMEs.
With Digital Yuan’s traceable transaction records, creditworthy SMEs gain improved access to supply chain financing. The fully auditable transaction history streamlines approval processes and increases credit limits, directly addressing SMEs' long-standing challenges of difficult and expensive financing due to failure to meet traditional credit requirements. By enhancing intelligent risk control through the Digital Yuan, supply chain finance providers resolve trust barriers between lenders and borrowers, eliminate information silos, and reduce reliance on core enterprises for credit validation and guarantees.
As the Digital Yuan’s adoption deepens across industrial scenarios, its integration with supply chain finance will intensify, emerging as a key focus area for expanding the digital currency’s pilot applications and development.
Enabling Inclusive Financial Services – Driving Digital Finance Innovation
The COVID-19 pandemic has significantly affected small and medium-sized enterprises (SMEs) in Shanghai. Zhongxiang Engineering Materials Co., Ltd. ("Zhongxiang Engineering"), a local SME participating in the pilot program for "Digital Yuan + Supply Chain Finance," successfully received approximately 2.8 million yuan in factoring financing issued by Sheng Ye in digital RMB.
Industry experts highlight that this marks not only an innovative application of the Digital Yuan in supply chain finance but also represents Sheng Ye's proactive efforts to alleviate financial pressures on Shanghai-based SMEs during the pandemic through practical digital currency solutions. For Zhongxiang Engineering, this initiative provides access to efficient and inclusive supply chain financial services while introducing the Digital Yuan as a new payment channel—eliminating service fees, withdrawal charges from third-party payment platforms, and offering faster, more secure transactions with enhanced financial accessibility.
SY stated: "The Tianjin Financial Bureau has seized the opportunity presented by the Digital Yuan pilot program, effectively empowering local financial institutions and advancing digital finance innovation. With their support and guidance, SY is honoured to collaborate with ICBC Tianjin Branch in integrating the Digital Yuan with supply chain finance. Following this successful implementation, we will continue exploring innovative applications of the Digital Yuan across industrial scenarios, leveraging our expertise in industrial technology to deploy smart supply chain solutions such as Smart Construction Sites and Hospital SPD systems. Additionally, we will enhance big data analytics and intelligent risk control through Digital Yuan-enabled smart contracts to address SME financing needs more efficiently."
As a leading supply chain technology platform, SY combines "Industrial Technology" and "Digital Finance" to build an integrated ecosystem serving strategic sectors like infrastructure, healthcare, and energy. Through tech-driven solutions (e.g., Smart Construction Sites, Hospital SPD services), SY accelerates industrial digitization while using big data to bridge information gaps between asset owners and financiers. By the end of last year, SY had established digital partnerships with multiple large enterprises, cumulatively facilitating over 130 billion yuan in supply chain assets and providing tailored financial services to more than 10,000 SMEs.
SY added: "The Digital Yuan, as critical financial infrastructure for the digital economy, unlocks boundless possibilities. In supply chain finance, we can extend its use to labor wage distribution—for instance, applying smart contracts to migrant workers' dedicated payroll accounts in construction to ensure timely and full payments. For public welfare, the Digital Yuan's controlled anonymity and traceability can guarantee legitimate fund usage while improving the precision of charitable aid and its management."
Looking ahead, SY Holdings will continue leveraging digital technologies to deepen collaboration with financial institutions, enhance its innovation capabilities, and expand the application scenarios of the Digital Yuan (e-CNY). This commitment aims to deliver more precise and flexible supply chain financial services for SMEs, driving greater supply chain efficiency and advancing financial inclusion.
