At Hong Kong’s Central Ferry Pier No 8, mainland Chinese tourist Lei is surprised to find that the digital currency e-CNY can be used to buy drinks from a vending machine.

Lei, a logistics worker in his twenties from Guangxi, had never encountered the digital currency and related payment system developed by the country’s central bank, the People’s Bank of China, in real life.

Hong Kong has been testing the use of e-CNY in a pilot scheme, with the aim of making cross-border retail payments more convenient.

“I remember when I was in senior secondary school, my politics class talked about this,” he said of the e-CNY. “But we haven’t seen this in real life. I saw this for the first time today in Hong Kong.”

The excitement did not move him, however, to use the option; he went with Alipay instead.

As China seeks to expand international use of the yuan amid rising geopolitical uncertainties and growing import-export trade, the Hong Kong government has made wider use of the currency a priority in its annual policy address and the city’s first five-year plan, covering 2026-30.

From vending machines to government receivables and payments for cross-border bills, yuan settlements are gaining momentum – although consumer habits and currency unpredictability during conversion into Hong Kong dollars remain obstacles. Government-led yuan adoption Hong Kong has the world’s largest offshore yuan liquidity pool.

As of July 31, renminbi deposits in the city had reached 1.3 trillion yuan.

In an interview with the SCMP earlier this month, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the city had taken steps to pave the way for broader yuan use among businesses and residents.

For example, he said the Hong Kong Monetary Authority, the city’s de facto central bank, had earlier injected more liquidity into the offshore renminbi market by expanding its renminbi business facility to 500 billion yuan. “Another thing that we should do is about education,” he said. “Try to share more use cases of renminbi in the region, either in the form of trade settlement and others, in such a way that there is greater interest and eagerness across the region using renminbi.”

He conceded that bottlenecks in yuan adoption needed to be addressed.

Hui cited market feedback on insufficient direct quotes between local currencies and the yuan.

With Asian economies trading more heavily among themselves after the Covid-19 pandemic, and the renminbi offering lower interest rates than the US dollar, Hui said there were stronger reasons for regional businesses to raise financing and settle trades in the yuan without touching the dollar. In June, the Monetary Authority signed a memorandum of understanding with Bank Indonesia, the country’s central bank, and the People’s Bank of China to establish a bilateral transaction framework for direct offshore renminbi-Indonesian rupiah trading, reducing exchange-rate risks and transaction costs for businesses.

“[Through this] there will be greater willingness for market participants to use RMB,” Hui said.

Yuxuan Tang, Asia head of rates and foreign exchange strategy at JP Morgan Private Bank, said global fragmentation could be manifested by the fact that rising geopolitical tensions and supply chain reconfiguration were encouraging countries and businesses to diversify their settlement arrangements.

Direct currency transaction frameworks, such as the mechanism between the offshore renminbi and rupiah mentioned in the policy address, could reduce transaction costs, limit foreign exchange risk and lessen operational dependence on a single settlement system. “The broader implication is a gradual evolution towards a more multicurrency global financial system,” Tang said. “Over time, this could deepen regional currency liquidity pools and support the development of local financial markets.”The current situation highlighted the transition of the offshore renminbi from a pure trade-settlement currency into an investment and diversification asset amid global fragmentation, Tang said.

Hong Kong authorities are also taking the lead in adopting more yuan in government revenue and expenditure. On the revenue side, Hui said the government had recently changed the law to allow it to collect stamp duty in renminbi when mainland investors bought and settled Hong Kong-listed shares directly in yuan through renminbi-denominated stock counters under the cross-border Stock Connect scheme. Trading in these stock counters is due to be rolled out by July next year.

Receiving stamp duty in yuan would also help the government manage exchange-rate risks, Hui said.

“When we have the RMB counters collecting stamp duty in RMB, it will also be an additional source of RMB,” he said. “Having them directly deployed will be a way for us to avoid the need for managing the exchange-rate risk. Fundamentally, it is to manage use – RMB in and RMB out.”

On the expenditure side, settlement in yuan is already a reality.

The government has made renminbi payments for a cross-border infrastructure project, the Western Cross-River Link Bridge connecting two parks in Hong Kong and Shenzhen in the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. More significantly, it is discussing with mainland authorities the possibility of settling the 2027-29 Dongjiang water supply agreement in renminbi.

The city paid HK$5.28 billion for Dongjiang water in 2025-26. Through the Dongjiang-Shenzhen water supply scheme, Hong Kong has relied on water from the Dongjiang, or East River, for the past 60 years, supplying up to 80 per cent of the city’s fresh water.

Cross-border social welfare payments are also shifting to renminbi.

According to the Social Welfare Department, the government spent about 37.7 million yuan in the 2025-26 financial year on places at residential care homes in Guangdong province.

As of September, 1,600 Hong Kong seniors were staying in 29 homes for the elderly taking part in the department’s subsidised residential care services scheme in the province.

An additional 5.77 million yuan was paid out in medical subsidies to 762 elderly participants who opted to receive the funds in the currency. Use cases At the retail level, e-CNY is another point of focus.

Hui revealed that the number of local retail outlets accepting the digital currency had jumped from 300 in May 2024 to about 5,200 currently.

“They cover a whole value chain in terms of retail stores, hotels, travel agencies, restaurants, convenience stores [and] supermarkets,” Hui said. “So fundamentally, we try to provide at the more retail level as much convenience as possible, in such a way that for the users who are really ready and willing to use e-CNY, they can do that more conveniently in Hong Kong.”

As of January this year, 79,600 e-CNY wallets had been registered, according to data from the People’s Bank of China.

The city’s Faster Payment System (FPS), a real-time payment platform, mirrors this rapid growth.

Daily renminbi transaction volume on the system surged from about 30 million yuan across 700 transactions in the fourth quarter of 2018 to an average of 21,500 transactions worth about 1.1 billion yuan daily by the third quarter of this year, according to bureau data.

To further fuel the momentum, the Monetary Authority is actively preparing to link FPS directly with the mainland’s UnionPay, a bank card and payment system, in a move expected to enable seamless cross-border retail payments across a vast merchant network.

Despite the rapid growth of QR-code payments, a banking source pointed to a lingering hurdle in the city’s infrastructure: settlement banks automatically convert these renminbi payments into Hong Kong dollars for local merchants at the back end as goods are priced in the local currency.

Asked about the instant conversion, Hui said authorities were trying to develop an ecosystem in which banks encouraged merchant acceptance by expanding support, noting that the number of retail banks supporting e-CNY top-ups through FPS had risen from 17 to 19. “So, what we try to do is really identify more players in the market that are ready and also willing to take on e-CNY in such a way that for people or for tourists who are coming here and also want to use it, they have the right means to do so,” Hui said.

Mainland tourists are believed to make up the largest group of e-CNY users in Hong Kong.

Mainlanders accounted for 78 per cent, or 31.9 million, of the tourists visiting the city in the first nine months of this year, according to the Hong Kong Tourism Board.

Hong Kong-based FreshUp, a major operator of vending machines, including those at the Central pier, is part of the private sector driving the wider use of the yuan in the city.

Founder and executive director David Lam said the company rapidly upgraded about 800 of its more than 5,000 machines to accept e-CNY.

In the weeks before the 15th National Games, co-hosted by Guangdong, Hong Kong, and Macau last November, there was a coordinated push to expand e-CNY acceptance and use in the city, mainly a bank- and merchant-led adoption campaign.

Appointed by Bank of China (Hong Kong), FreshUp spearheaded the roll-out in October last year. “We helped them modify many things, such as installing QR-code scanners, ensuring back-end data accuracy, and integrating the API [application programming interface],” Lam said. “We spent a lot of effort on this project.”

He said the company had deployed the payment option across targeted tourist-heavy transport hubs. “The response has been very good. It has achieved Bank of China’s expectations for the project,” Lam noted, declining to reveal exact transaction data.

By capturing what Lam described as “high-frequency, low-amount” daily transactions, these micro-purchases are quietly building consumer habits around the use of the digital yuan.

However, mainland tourist Mr Wu said more promotion and marketing was needed to raise awareness of e-CNY in the city, given the prevalence of Alipay and WeChat Pay. Alipay is owned by Ant Group, an affiliate of Alibaba Group Holding, which also owns the South China Morning Post.

“It has not been [widely] promoted,” said Wu, who is in his fifties. “Someone sent this [to me] previously but most people have not used it because Alipay and WeChat Pay are there already.”Bank of China (Hong Kong) deputy chief executive Huabin Wang recently said that a growing range of renminbi products was among the advantages the city possessed that would ensure broad prospects as a global offshore renminbi hub.

“First, Hong Kong’s first five-year plan provides clearer guidance for the development direction of its renminbi business,” Wang said.

“Second, the city’s renminbi business ecosystem has become increasingly mature with its expanding range of offshore renminbi products.

“Third, Hong Kong has a unique advantage in telling the story of the international use of the renminbi, and its ability to reach emerging markets is strengthening.”