Central bank digital currencies and state capitalism in China: The decentralisation and recentralisation dynamics of the E-CNY

This article takes E-CNY, currently the world’s largest central bank digital currency (CBDC) project, as its focus. It analyses the development and roll-out of the E-CNY by explicitly connecting with and contributing to wider reaching debates about the distinctive role of the state in Chinese state capitalism. Rather than treat authoritarian and planned party-state capitalism in China as a particular model or national variety of the new state capitalism which is underway across the globe, the article foregrounds one of the discrete ways in which the state operates in Chinese state capitalism – that is, via institutional adaptation across and between administrative scales, leading to processes of political decentralisation and recentralisation. The development of the E-CNY is shown to have featured political decentralisation and recentralisation dynamics. On the one hand, concessions to local government agencies over implementation choices and the construction of application scenarios for the E-CNY resulted in urban regional pilot programmes which were crucial to initial experimentation. On the other hand, the data architecture and smart contract design of the E-CNY has increasingly enabled political recentralisation processes that empower the People’s Bank of China (PBOC). While the rise of CBDCs in response to the expansion of private money, digital payment systems and geopolitical competition may in general be symptomatic of the new state capitalism, the reassertion of central bank and state power in China has witnessed constantly evolving mechanisms of negotiation and bargaining between the central and local governments, reflecting the multi-scalar complexity of Chinese state capitalism.