Public sector workers in an eastern Chinese city are set to be paid fully in digital yuan, as the country makes a significant push to popularize the currency. Changshu, located in the province of Jiangsu, will start the new payment process in May, according to an official document widely posted on government websites. This is the biggest rollout of the currency, also known as the e-CNY, in China so far, according to state media. Government employees as well as staff at state-owned companies and public institutions such as schools, hospitals, libraries, research institutes and media organizations in the city will be affected. Changshu, a city of 1.7 million residents, was already experimenting with the digital yuan, a form of money that exists only online and is managed and backed by China’s central bank. Like cryptocurrency, the digital yuan incorporates some elements of blockchain technology: Every transaction is recorded and traceable in a digital ledger. Since last October, Changshu has been paying the transit subsidies for some government employees in digital yuan. China is already on the verge of becoming a cashless society, but the vast majority of electronic transactions happen on privately owned apps (Alipay and WeChat Pay), outside of the immediate purview of the state. An official yuan would change that, giving Beijing an unprecedented amount of information about what people are spending their money on and where. The world’s second largest economy has been trialing the digital yuan in Chinese cities since 2020, as it prepares for a national rollout that could put China ahead of Europe and the United States in the global race to develop a state-backed digital currency, which is also known as central bank digital currency (CBDC). Struggling for traction The timeline for a nationwide launch has not yet been announced, but Beijing has tried many ways of marketing the currency. Last January, the central bank, the People’s Bank of China, released a wallet app on Apple and Android stores that can be used in more than a dozen cities and regions that were piloting the currency. At the same time, it pressured businesses, including big Western companies such as McDonald’s\n \n (MCD) and Nike\n \n (NKE), to allow customers to use the digital yuan during the Beijing Winter Olympics. Several Chinese cities, including Beijing and Shenzhen, have even given away millions of dollars in digital yuan to their residents outright, encouraging them to use the virtual money. It has also asked privately-owned apps to actively promote the digital yuan. Alipay began trialing digital yuan payments in 2021, and Tencent\n \n (TCEHY) announced last year that it would also start supporting the digital yuan in its WeChat Pay wallet. But the currency has struggled to gain traction. Transactions using the currency totaled just 100 billion yuan ($14.5 billion) by the end of last August, equivalent to an average of 3.6 billion yuan per month since the trial started, according to the most recent data released by the People’s Bank of China. While that marks some progress following three years of trials, it’s still far from mounting a serious challenge to privately owned digital payment apps. Ant Group, which owns Alipay, revealed in 2020 stock exchange filings that the app processed $1.6 trillion on average each month — more than a thousand times the digital yuan’s monthly transaction volume at the time. Analysts have previously cited concerns about the reach of the government’s power and a lack of incentives as reasons for the lack of enthusiasm. After all, industry leaders Alipay and WeChat Pay already have hundreds of millions of users who are familiar with their services.