In a bid to surpass the financial dominance of the U.S., the People’s Republic of China is doubling down to develop its e-yuan that has been years in the making. Arguably, no financial ally in China is bigger than Ant, and Jack Ma’s company has confirmed that they have partnered to create a platform that will support the People’s Bank of China’s digital currency upon its release. Tencent will be joining the collaboration as well.
This is a big step away from Ant Group’s recent dramas with the Chinese Banking authorities who blocked the company’s move to go public with threats of regulation. It demonstrates Jack Ma and his company’s resolve to work with the government rather than against it, but it won’t be without conditions on Ant’s end. The announcement of the partnership was made public through a series of posters put up by both fintech giants during the Digital China Summit espousing a “history of cooperation with the PBoC on the Digital Yuan.” Despite this first public announcement, Ant Group’s ongoing involvement with China’s digital currency predates back to 2017.
Reuters shared that the digital wallets being developed by Ant Group and Tencent are currently being beta tested and will likely be availably bundled with other popular apps in China such as Didi, Bilibili, and Meituan. However, they will not be possibly integrated with WeChat or AliPay. As such, both Ant Group and Tencent’s payment platforms will not be able to transfer or store the digital currency, highlighting that the People’s Bank of China intends to undercut Ant Group and Tencent’s market dominance in the payments space despite the collaboration.
In return for its contributions, Ant Group has insisted on leading the development, disputing that “too much government intervention would drag the industry down,” according to Francis Lun, CEO of Geo Securities who went on to suggest that the collaboration may release a little pressure for the fintechs from the regulator’s anti-monopoly probe. Regardless, the development of the platform will be based mostly on Ant Group’s platform with the move being “jointly promoted” by Tencent.
China’s e-yuan will be the first government digital currency issued worldwide. Ant Group’s involvement in this shows a turn from Ma’s recent moves to stay out of sight and distance himself from the government after its suspension of the landmark IPO.