In brief, some individuals are hesitant to engage with the digital yuan due to apprehensions. The restricted offline and online utility hampers its practical application. Privacy worries and a lack of diverse usage scenarios emerge as pivotal obstacles hindering wider acceptance.

Within the context of the central bank's digital currency (CBDC) trial initiative, certain participants are steering away from wholeheartedly embracing the digital yuan owing to lingering reservations about the government-backed digital tender. Notably, as per a report by the South China Morning Post dated May 13, some Chinese state employees, despite receiving their salaries in digital yuan, exhibit a reluctance to engage, often opting to convert their digital holdings into physical cash.

The justification for the lukewarm reception towards the digital yuan stems from varied factors. Sammy Lin, an account manager at a state-affiliated financial institution in Suzhou, elucidated his reluctance towards the digital yuan due to the absence of interest accrual within the e-CNY application. Lin further noted a dual constraint hampering the digital currency's utility, both in the online and offline realms, limiting its practicality and widespread use as a CBDC.

Government official Andrew Wang also shed light on his perspective, expressing a tempered concern surrounding the concept of digital cash, given that only a portion of his earnings transpires in digital yuan. Conversely, his spouse, who receives her entire salary in the digital yuan format, promptly converts the entirety into physical currency, citing the digital currency's impracticality as the primary driver for the conversion. Wang underscored the pivotal limitation that the e-CNY wallet does not permit money deposition or transactions for acquiring financial instruments.

Apprehensions regarding the digital yuan's utilization in China extend beyond the mentioned practical constraints. Broader surveillance anxieties and a scarcity of varied usage instances contribute to the reluctance observed. According to insights shared by the former Governor of the People's Bank of China, Yi Gang, transactions crossing the $250 billion mark were facilitated through the digital yuan by July 20, 2023. However, researcher Ye Dongyan from the Cheung Kong Graduate School of Business in Beijing articulated the imperative for the government to harmonize privacy preservation with heightened security measures in their endeavors to broaden digital yuan adoption. Dongyan underscored the contrasting nature of digital yuan compared to its paper counterpart, necessitating robust safeguards against data tracing and threats to virtual security.

Gang highlighted that the paramount challenge of the digital financial epoch lies in navigating privacy discrepancies. Despite acknowledging these concerns, Gang defended the digital yuan's privacy integrity during a forum in Beijing in March, advocating for "controllable anonymity" to ensure a blend of transaction privacy and oversight—allowing small transactions to remain less scrutinized while exerting heightened vigilance over larger dealings.

In a bid to augment CBDC acceptance levels, multiple realms within China have been industriously striving since the digital yuan's 2020 advent. Numerous provinces have embarked on initiatives aimed at fostering CBDC adoption by disbursing subsidies and consumption incentives exceeding $26.5 million.

Overall, this report casts a crucial spotlight on the hurdles impeding widespread digital yuan adoption in China, underscoring the criticality of addressing public anxieties surrounding the digital tender's security and operational seamlessness within the societal framework.