China Stablecoin Push Challenges Dollar Dominance
China is reportedly considering launching a yuan-backed stablecoin, beginning with a pilot rollout in Hong Kong and Shanghai. The move would mark a sharp policy turn after years of heavy restrictions on crypto while promoting its own central bank digital currency, the digital yuan.
Potential role of a yuan stablecoin
The development, first reported on Wednesday, underscores China’s ambitions to expand the yuan’s role in international finance. However, experts caution that success is far from guaranteed, especially given the limited traction of the digital yuan.
Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, noted to Cointelegraph that Alipay and WeChat Pay dominate everyday transactions in China, leaving little room for the CBDC. Instead, he said, “I tend to think that probably the most interesting applications of a renminbi [yuan] stablecoin is going to be cross-border payments.”
He added, “One of the most interesting things about having renminbi stablecoins floating around is, is this going to allow people to get money out in ways that they weren’t through the banks?” Still, he warned that restrictions and surveillance tied to the yuan could undermine the stablecoin’s appeal:
“China is famously anti-crypto… So the interesting thing with this stablecoin idea is: OK, you have something you call a stablecoin, it’s denominated in renminbi, but is it going to have all the same restrictions and surveillance and controls on it that the current forms of renminbi have? And if the answer is yes, it’s probably not going to be that attractive in comparison to something in USD, which is really freely usable.”
Dollar Dominance and Global Competition
Patrick Tan, CEO of blockchain intelligence firm ChainArgos, pointed out the structural hurdles to Cointelegraph: “Ninety-eight percent of all stablecoins and stablecoin transactions are dollar-based,” he said. He noted that even on exchanges with strong Chinese ties such as Binance, OKEx, and Bybit, the preferred currency remains the U.S. dollar.
For Tan, the challenge goes deeper: “If China wants to make the digital yuan attractive, it needs to make the yuan attractive first. And to make the yuan attractive requires significant, large systemic political and economic changes and reforms, which, given the current climate in China, I think would be extremely challenging at best.”
Whether Beijing’s stablecoin ambitions succeed or stall, analysts agree it signals a broader reality: stablecoins are no longer just technical infrastructure for crypto, they are instruments in a wider geopolitical contest over the future of global money.
Sources:
https://www.swift.com/sites/default/files/files/rmb-tracker_july-2025.pdf