The China's digital Yuan will target US Dollar, not Bitcoin. As we know that US DOllar is now the first fiat that give the biggest impact on the world. USD influence is very high in the countries currency so far. In this case, although this is a digital currency, the target is still the same that is to rival USD and to chip away the hegemony of the USD.
As we can think here, Bitcoin is very popular and it also gives influence to the digital asset. however, the most influencing currency in this world is not BTC, which is US Dollar. Not all people in the world also know and use BTC. but, USD is always used as a conversion for many activities and also assets. The power of the dollar so far cannot be broken. However, it doesn't mean that BTC is not considered as the rival. Who knows that someday, the CHina digital Yuan also targets BTC?
here is also what experts said about the target of digital yuan is US dollar, not Bitcoin:
https://cointelegraph.com/news/expert-chinas-digital-yuan-will-target-the-dollar-not-bitcoinYes, the focus is the US--but not only about competition, DCEP is also about regulation. It is outside of the global financial system in that it is not subject to sanctions--which the US uses liberally as a geoeconomic foreign policy tool. DPRK and Iran will benefit from this, and other sanctioned entities as well when this rolls out.
DCEP is versatile--it will assist in supply-chain dominance and dollar-less transactions. As countries may choose to peg their currencies to the renminbi and transact using DCEP, there won't be a need to hold dollar reserves and the demand for the dollar will drop.
https://www.foreignaffairs.com/articles/china/2020-05-20/could-chinas-digital-currency-unseat-dollar