When China's central bank launched pilot testing of the digital yuan in 2020, officials framed it as a domestic modernization project. Five years later, as of September 2025, the e-CNY has processed 14.2 trillion yuan (approximately $1.9 trillion) across 225 million personal wallets in 26 regions, making it the world's largest central bank digital currency initiative by transaction volume.

But the more consequential development isn't happening in Beijing or Shenzhen. It's unfolding quietly in cross-border corridors from Hong Kong to Abu Dhabi, Singapore to Thailand — a patchwork of pilot programmes that could, over time, reshape how money moves across borders.

The challenge for journalists covering this story: separating what's actually happening from what various actors claim is happening.

What We Know For Certain

Project mBridge, a multi-CBDC platform involving the Bank for International Settlements and central banks from China, Hong Kong, Thailand, the UAE, and (as of June 2024) Saudi Arabia, reached its "minimum viable product" stage in mid-2024. This isn't speculation — it's documented by the BIS itself.

The platform uses distributed ledger technology to enable instant cross-border settlements between participating central banks and commercial institutions. Between April and September 2024, 35 commercial banks conducted transactions in four CBDCs (e-CNY, e-THB, e-AED, and e-HKD). In one documented test, a payment between Hong Kong and Abu Dhabi cleared in approximately seven seconds with fees reduced by 98% compared to traditional banking.

This matters because cross-border payments remain expensive and slow. Approximately 80% of intra-African payments route through Europe or the US via dollars, and remitting funds from South Africa costs about 13% of the transfer amount — more than double the G20 average.

Hong Kong represents the most advanced cross-border deployment. In May 2024, the Hong Kong Monetary Authority enabled residents to set up e-CNY wallets using only their mobile phone numbers and fund them through the city's Faster Payment System — marking the first connection between a faster payment system and a CBDC globally. Users can now spend digital yuan at merchants across the Greater Bay Area without opening mainland bank accounts.

Singapore and China launched a pilot in late 2023 enabling travellers to use e-CNY for tourism spending in both countries, though adoption data remains limited.

What's Been Misreported

Several claims circulating in analysis pieces and commentary don't withstand scrutiny:

The Kenya Pilot: Multiple articles have referenced a July 2025 pilot between Kenya and China involving e-CNY trade settlement. After extensive search of official sources, central bank announcements, and financial press, no evidence supports this claim. While China does have extensive payment infrastructure in East Africa through UnionPay, which operates in Kenya, this is distinct from e-CNY deployment.

PalmPay and Digital Yuan: PalmPay, a Nigerian fintech backed by Chinese phone manufacturer Transsion, has been incorrectly described as "linking directly into systems supervised by the People's Bank of China" for e-CNY transactions. PalmPay is indeed Chinese-owned and launched in Nigeria in 2019 with a $40 million seed round led by Transsion. However, there is zero evidence connecting it to e-CNY infrastructure. Nigeria launched its own CBDC, the e-Naira, in 2021, though with limited success. PalmPay processes naira, not digital yuan.

Trade Volume Precision: Trade between China and Africa reached approximately $295-296 billion in 2024, up 4.8-6.1% from 2023 depending on the source — not the "$280 billion" figure sometimes cited, which appears to reference 2023 data adjusted incorrectly.

The Actual African Picture

China's digital currency engagement with Africa exists, but it's more aspirational than operational.

African central banks have participated as observers in Project mBridge discussions, and the project reached minimum viable product status in mid-2024. But observation isn't implementation. In December 2023, the Bank of China completed a ¥100 million ($14 million) cross-border settlement for precious metals via e-CNY, and a separate pilot involved iron ore payments — but these were isolated commodity trades, not systematic adoption.

Since December 2024, China has removed tariffs on 98% of products from 33 least-developed African countries, which could facilitate yuan-denominated trade. But tariff removal doesn't equal digital currency adoption.

The infrastructure potential is real. China's BRI commitments to Africa totalled $29.2 billion in 2024, up 34% from 2023. Much of this flows through Chinese state banks that could theoretically integrate e-CNY settlement. The question is whether African counterparties want it.

Why This Matters Geopolitically

In October 2024, the Bank for International Settlements announced it would end its direct involvement in Project mBridge, handing control to the participating central banks. This followed discussions among Western officials about concerns that mBridge could enable sanctions evasion, particularly after Russian President Vladimir Putin referenced the potential for alternative payment systems at the BRICS summit.

The geopolitics aren't subtle. Every cross-border payment that settles in e-CNY instead of dollars is one more transaction outside Western visibility and control. But the volume remains microscopic relative to global flows.

By mid-2024, cumulative e-CNY transaction volume reached ¥7 trillion (approximately $1 trillion) — impressive domestically, but dwarfed by the $5 trillion that flows through SWIFT daily. China's currency accounted for just 2.88% of global payments by value as of June 2025, peaking at 4.7% in July 2024, compared to the dollar's 47% share.

The European Non-Response

If China is building digital payment rails, where's the Western counter-strategy?

The European Central Bank's digital euro project remains years from deployment, focused primarily on domestic retail use rather than cross-border efficiency. The Reserve Bank of India has scaled the e-rupee to become the world's second-largest CBDC pilot by transaction volume, with ₹10.16 billion in circulation as of March 2025 — but this serves domestic financial inclusion goals, not yuan competition.

The United States Federal Reserve continues studying a potential digital dollar, but no launch timeline exists. The institutional inertia is understandable: when you control the world's reserve currency, disrupting your own system seems unnecessary — until it's too late.

What Actually Changes

During the 2022 mBridge pilot, $22 million in trade transactions were executed over five weeks using the platform. Small, but functional. The system works. The question is adoption.

The likely trajectory isn't dramatic rupture but gradual accretion. Chinese exporters offering yuan-settlement discounts. Belt and Road borrowers repaying loans in e-CNY to reduce forex exposure. Commodity traders in sanctioned or de-risked countries finding mBridge easier than correspondent banking.

Each individual transaction is negligible. Collectively, they could shift 5-10% of China's cross-border flows onto e-CNY rails within a decade. That wouldn't overthrow dollar dominance, but it would create optionality — and optionality is the beginning of competition.

The Surveillance Question

Every discussion of China's digital currency eventually confronts the privacy concern. The architecture is explicit: the People's Bank of China has stated that "the e-CNY system collects less transaction information than traditional electronic payment" but acknowledged that information can be shared with government agencies "as stipulated in laws and regulations".

For African or Asian countries considering e-CNY adoption, this creates a trilemma: accept potential Chinese surveillance, maintain expensive dollar dependence, or develop independent CBDC infrastructure (which most lack capacity to build). None of these options are cost-free.

Methodology Note

This analysis is based on official central bank announcements, BIS documentation, verified financial press reporting, and academic research published between 2023-2025. Claims not supported by at least two independent, credible sources were excluded or explicitly flagged as unverified.

The original version of this article repeated several unsourced claims about Kenya and Nigeria that proved unverifiable. Those have been corrected. When covering emergent financial technology, especially involving geopolitical implications, the temptation to over-extrapolate from limited data is constant. Resisting that temptation is the only way to maintain credibility.

Sources:
• Bank for International Settlements, mBridge project documentation (2024)
• People's Bank of China, Digital Currency Institute reports (2024-2025)
• Hong Kong Monetary Authority official announcements (May 2024)
• China General Administration of Customs trade data (2024-2025)
• IMF CBDC adoption research notes (2024)
• Carnegie Endowment for International Peace, China digital yuan analysis (2021)
• Multiple financial press sources cross-referenced for verification

Correction Policy: This article corrects false claims about specific country pilots and fintech partnerships that appeared in earlier analysis. Where evidence is ambiguous or incomplete, that uncertainty is stated explicitly rather than papered over with confident-sounding assertions.