Yuan digitalization strategy as a framework for China's technological sovereignty

Abstract

The relevance of this research topic is driven by the global geoeconomic transformation and increasing competition in the financial technology sector. In this context, China's strategy to create its own digital currency (DCEP) represents a unique case of building technological sovereignty in a critically important area. The study objective is to analyze Beijing's comprehensive approach, which goes beyond simply modernizing the payment system and aims at changing the architecture of both the domestic and international financial ecosystems fundamentally. The aim of this article is to analyze the strategy for implementing the digital yuan comprehensively as a multifunctional tool for strengthening China's technological, economic, and monetary sovereignty. The methodology is based on the system approach, including the analysis for regulations, the study of pilot project data, and a comparative analysis. The study found that the legal basis for the issuance was the ratification of amendments to the Law on the People's Bank of China, which established the digital yuan as legal tender. The successful experience in pilot launches in Shenzhen, Xian, and Suzhou was examined in detail, where the two-level distribution system was tested and a comprehensive ecosystem was created. The key elements include smart wallets supporting offline transactions and programmable money functionality, as well as deep integration into retail and government services. The key finding of the article is that the digital yuan is a strategic asset that allows China to reduce its dependence on global financial infrastructures such as SWIFT and Visa/Mastercard, create a new, controlled architecture for domestic and crossborder settlements, and gain a powerful tool for implementing targeted monetary and fiscal policies.