Amid the global trade war and President Donald Trump’s unprecedented tariffs, the Chinese yuan has declined to multi-year lows against the US dollar.
In an effort to defend its fiat currency, the People’s Bank of China (PBOC) has been responding with monetary interventions and a torrent of positive media about yuan usage.
In the nine months prior to March 11, 2025, if PBOC data is to be trusted, unique personal wallets of its digital yuan (e-CNY) more than quadrupled from 180 million to 800 million, and cumulative transaction volume increased 45% from 7 to 10.2 trillion e-CNY.
Although the US reversed most of its steep tariffs on dozens of countries, Trump insisted on raising tariffs on Chinese goods. Within the last few days, US tariffs on Chinese imports have risen in step functions to 104%, then 125%, and now 145%.
In response, China has already levied retaliatory tariffs on its US imports. The PBOC also asked lenders to scale back USD purchases.
However, even the PBOC could not counteract bearishness in FX markets. This week, the yuan slid to a 17-year low of 7.3498 CNY per USD.
China defends yuan, publishes record-breaking CBDC stats
The PBOC’s claims about record-breaking usage of its digital yuan are difficult to believe for many reasons. Not only is state-controlled media notorious for exaggerating national statistics, but it also has every motivation amid the April 2025 trade war to project confidence in its fiat currency.
Indeed, Trump has taken aim squarely at China in his tariff war, imposing the harshest tariffs of any major country on its exports to US consumers.
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The PBOC also has an incentive to brag about record usage of its CBDC amid concerns that the government uses e-CNY to track and control how citizens spend their money. Most mainland Chinese digital wallets directly tie to citizens’ digital ID cards.
At this moment, China is certainly looking for any statistics that make the yuan and its associated CBDC appear strong amid its US trade war and a fiat currency decline.
The PBOC has also been expanding its CBDC-related functionality. It has added features like the ability to scan QR payment codes or send transactions even while offline.
It also expanded the number of locales accepting the CBDC, including allowing e-CNY payments for public transportation.
