In summary, there is a hesitancy among some individuals regarding the adoption of the digital yuan, stemming from various concerns. The limited functionality both offline and online poses significant challenges to its practical use. Additionally, worries about privacy and the lack of diverse usage scenarios act as crucial barriers to broader acceptance.

Within the scope of the central bank's trial initiative for the digital currency (CBDC), certain participants are showing reluctance to fully embrace the digital yuan. Notably, as highlighted in a report by the South China Morning Post dated May 13, some Chinese state employees, despite receiving their salaries in digital yuan, are hesitant to engage with it, often preferring to convert their digital holdings into physical cash.

The reasons behind this lukewarm reception towards the digital yuan are multifaceted. Sammy Lin, an account manager at a state-affiliated financial institution in Suzhou, explained his reservations towards the digital yuan due to the lack of interest accrual within the e-CNY application. Lin also pointed out a dual limitation affecting the digital currency's usability, both online and offline, which restricts its practicality and widespread adoption as a CBDC.

Government official Andrew Wang shared his perspective, expressing concerns about digital cash, particularly as only a portion of his earnings are in digital yuan. Conversely, Wang's spouse, who receives her entire salary in digital yuan, chooses to convert it into physical currency promptly, citing the impracticality of the digital format. Wang emphasized the pivotal limitation of the e-CNY wallet, which does not allow money deposition or transactions for acquiring financial instruments.

Apprehensions surrounding the utilization of the digital yuan in China extend beyond practical constraints. Broader concerns about surveillance and the lack of diverse usage instances also contribute to the observed reluctance. According to insights from the former Governor of the People's Bank of China, Yi Gang, transactions exceeding 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 stressed the need for the government to balance privacy preservation with heightened security measures to promote broader adoption of the digital yuan. Dongyan emphasized the contrasting nature of the digital yuan compared to its paper counterpart, highlighting the necessity for robust safeguards against data tracing and virtual security threats.

Gang highlighted that the primary challenge of the digital financial era lies in addressing 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 balance of transaction privacy and oversight—allowing smaller transactions to remain less scrutinized while exerting heightened vigilance over larger transactions.

To bolster acceptance levels of the CBDC, various sectors within China have been diligently working since the digital yuan's inception in 2020. Numerous provinces have initiated initiatives aimed at fostering adoption by offering subsidies and consumption incentives totaling more than $26.5 million.

In conclusion, this report sheds light on the obstacles hindering widespread adoption of the digital yuan in China, underscoring the importance of addressing public concerns regarding security and operational seamlessness within the societal framework.