Money, State, and the Two Masters: The Political Economy of China's CBDC

Drawing on Minsky’s insight that capitalist financial systems must serve two conflicting masters—financing economic development through credit creation and providing a stable payments system—this article examines China’s Central Bank Digital Currency, the e-CNY. We argue that this tension has been amplified in the digital age by private payment platforms and crypto assets, reducing State capacity to control the monetary and financial system. The article focuses on China precisely because the e-CNY developed within an institutional context fundamentally different from Western economies: a financial system dominated by State-owned commercial banks where the State has exercised extensive coordination over credit allocation and payment infrastructure. Our hypothesis is that the e-CNY’s design—its two-tier architecture, managed anonymity, and programmable features—reflects a strategic decision by the Chinese State to recover control over a payments system that had been privatized by WeChat Pay and Alipay, while preserving its capacity to direct credit toward developmental objectives. Drawing on Desan’s framework of money as a constitutional project, we demonstrate that the e-CNY is not a technocratic optimization but a constitutional intervention, a reconfiguration of the institutional foundations through which monetary power is exercised, continuing China’s distinctive approach to managing State power, market mechanisms, and technological change.