Central bank digital currencies and state capitalism in China: The institutional hybridity of the E-CNY

• Provides a case study of China’s E-CNY, a central bank digital currency project led by the People’s Bank of China. • Analyses the development of the E-CNY as an instance of state capitalism in China. • Advances a framework for understanding state capitalism in the context of monetary production and payments. • Argues that the E-CNY features the hierarchical re-layering of the public–private institutions and infrastructures in China. • Shows how the E-CNY favours state-owned banks and puts private BigTech payment platforms in the service of the state. In human geography and political economy research, the recent proliferation of central bank digital currencies (CBDCs) is explained as the re-establishment of state power and authority in response to the digitalization of money and payments by private firms. Focusing on the most advanced CBDC project to date – China’s E-CNY – this paper builds on the limited work to date that has identified the importance of central banks to new state capitalism and does this by foregrounding payments and the rise of CBDCs. This paper combining and developing two literatures: recent work on state capitalism that foregrounds the economic roles of state institutions, especially in the contemporary period of geo-economic and technological competition; and longer-standing research that stresses the public–private hybridity of monetary production and payment systems. It is argued that while CBDCs are an instance of the new state capitalism to some extent, the E-CNY case demonstrates how distributed and relational state actions feature multiple institutions of different kinds. Given extant monetary production and digital payment infrastructures in China, the E-CNY project entails a distinctive institutional hybridity. To reposition itself in the ‘re-layered’ payment infrastructures of the E-CNY, the People’s Bank of China (PBOC) has reasserted the importance of state-owned banks (SoBs) within these infrastructures and redefined the roles of private banks and the leading BigTech firms which dominate the intermediation of digital payments.