Shanghai Hong Kong Enhance Financial Connectivity With Digital RMB Plan

Shanghai and China Hong Kong have taken a significant step towards enhancing financial connectivity by signing a new "Action Plan" focused on digital RMB and offshore RMB stablecoins. This initiative aims to strengthen the collaboration between the two regions, fostering a more integrated financial ecosystem. The plan is part of a broader strategy to gradually expand the scope of digital RMB applications and counter the influence of USD stablecoins.

The launch of "Cross-Border Payment Connect" on June 22, 2025, marks a pivotal moment in this collaboration. This system significantly shortens the remittance chain, reduces intermediary costs, lowers transaction fees, and cuts down processing time, thereby improving remittance efficiency and user experience. For instance, Ms. Fang from Shenzhen was able to remit 10,000 RMB to her daughter's account in China Hong Kong in just a few seconds using the China Merchants Bank App. This service, though not directly integrated into the digital RMB wallet, serves as a "pre-runway" for the future internationalization of the digital RMB.

The technical interfaces and clearing logic of "Cross-Border Payment Connect" are designed to support the cross-border interconnection of the digital RMB in countries and regions along the "Belt and Road" and in the RCEP countries. This development is further bolstered by the access of six foreign banks from Africa, Central Asia, the UAE, and Singapore to the Cross-Border Interbank Payment System (CIPS), laying a technical foundation for the international expansion of the RMB payment and clearing system.

China Hong Kong has also pressed the "accelerator button" on digital finance with the release of the "Policy Declaration on the Development of Digital Assets in China Hong Kong 2.0" on June 26, 2025. This declaration focuses on the comprehensive construction of technical standards and regulatory systems, replacing the term "virtual assets" with "digital assets" and proposing a new development framework. The framework aims to create a credible, sustainable, and expandable digital asset ecosystem, leveraging China Hong Kong's institutional advantages and international connectivity.

The digital RMB has been expanding its scenario applications, with the Shanghai Metro now supporting digital RMB hard wallets and bank cards for entry at all stations. This upgrade provides a more convenient and smooth payment experience for both domestic and foreign tourists. The renovated turnstiles support NFC recognition and are compatible with international bank cards and digital RMB hard wallets, allowing small-amount contactless payments without replacing the terminal hardware.

The digital RMB has three major characteristics: "account and value model," "controllable anonymity," and "programmability." These features enable the digital RMB to be integrated with the traditional bank account system, support value exchange in the form of currency strings, and achieve programmability through smart contracts. The digital RMB also meets compliance requirements such as anti-money laundering and counter-terrorism financing, building a credible compliance template for its cross-border pilot.

The launch of "Cross-Border Payment Connect" is not just an experiment but the start of a standardized and replicable mechanism. It provides a "system runway" for the future cross-border payment of the digital RMB, supporting the instant exchange and clearing of the RMB and the China Hong Kong dollar. This mechanism is expected to significantly improve the settlement convenience and transparency of the RMB in cross-border scenarios.

The "going global" of the digital RMB is a strategic move to build a matching digital currency system for the digital economy. The "Action Plan for Promoting the High-Quality Development of Digital Finance," issued in November 2024, aims to establish a modern financial system highly adaptable to the digital economy by the end of 2027. This plan, along with the development of the digital RMB, is part of a broader strategy to promote a globalization path with "system first," leveraging digitalization as an important lever for RMB internationalization.

In summary, the collaboration between Shanghai and China Hong Kong on digital RMB and offshore RMB stablecoins is a significant step towards enhancing financial connectivity and promoting the internationalization of the digital RMB. The launch of "Cross-Border Payment Connect" and the release of the "Policy Declaration on the Development of Digital Assets in China Hong Kong 2.0" are key milestones in this journey, paving the way for a more integrated and efficient financial ecosystem.