China expands digital currency program with trial at Hainan Lu Xun Middle School. China launched its central bank digital currency (CBDC) ahead of the Beijing Winter Olympics and is currently conducting pilot projects in several regions across the country.
The college essay, however, involves much more than digital payments. Chinese administrators basically equip students with SIM cards which also serve as payment cards and student cards. These SIM cards are then placed in the feature phones that students are allowed to carry with them when they go to school.
In this regard, Chinese students are not allowed to take modern smartphones to class in lower and middle grades. Instead, they only get a feature phone that can be preloaded with the numbers of three family members for emergency calls.
The new CBDC SIM cards will give these phones more functionality without turning them into full-fledged smartphones. Most notably, the SIM cards will enable NFC payments in digital currency at on-campus stores and at select off-campus merchants that have school approval. SIM cards will also have a GPS utility that allows administrators and parents to track a child’s location.
CBDC SIM cards are a collaboration between Chinese bank ICBC 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 kids spent money. Privacy advocates have argued that the new cards represent an invasive form of social control, although this is unlikely to slow the program’s rollout.
The college trial isn’t the only CBDC project currently underway in China. An initiative in the Hainan Free Trade Port region will allow consumers to prepay for certain goods and services in a way 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 makers like Union Smart, Goldpac Group and Chutian Dragon are already working on creating biometric payment cards for use with the country’s CBDC program.
Sources: Ledger Insights and central bank