Beijing Explores A Chinese Stablecoin Solution To Counter Dollar’s Dominance

The world is witnessing the rise of the dollar-pegged stablecoin. However, China, for one, is not happy with its growing dominance in global finance. A Chinese stablecoin might be on the horizon as the country explores yuan-backed stablecoins, in a major pivot towards digital assets.

According to an article published by Reuters on August 21, 2025, the Chinese Council is exploring ways to internationalise the Yuan and is reportedly set to review a roadmap for the same later this month.

This plan includes the development of a Chinese stablecoin.

JUST IN: China considers yuan-backed stablecoins, eyes rollout in Hong Kong and Shanghai for cross-border use – Reuters. pic.twitter.com/YfqhVEta1E

— Whale Insider (@WhaleInsider) August 20, 2025

Sources indicate that this initiative is a direct response to the growing influence of US dollar-pegged stablecoins, such as USDT and USDC, which have become a cornerstone of the global cryptocurrency markets and are being increasingly used in cross-border transactions.

According to Reuters, Hong Kong and Shanghai will serve as launchpads for this project, where high-level leadership are to convene a study session on stablecoins to develop the state’s policy for the Chinese stablecoin.

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Chinese Exporters’ Use Of USDT, USDC Drives Chinese Stablecoin Pivot

The dominating position held by the dollar-pegged stablecoins has sparked an urgent decision in China to pivot to a yuan-backed stablecoin. Since stablecoins are mostly used for cross-border transactions, a stablecoin pegged to the dollar gives the US a major advantage over China.

According to the Bank for International Settlements, US-pegged stablecoins make up over 99% of the global stablecoin supply.

However, what caused the Chinese to pivot to stablecoins is the growing use of dollar-pegged stablecoins by Chinese exporters, as noted by Reuters’ report.

This is a major cause for concern for the Chinese authorities since each transaction settled in either USDT or USDC further contributes to the dollar’s dominance and also helps to contribute to a parallel financial infrastructure that bypasses traditional oversight.

Growing usage of the USDT or the USDC in China further haemorrhages the efforts made by the Chinese authorities to internationalise the Yuan.

The Shanghai Cooperation Organisation Summit set to take place in Tianjin later this month will serve as the diplomatic debut for China’s new financial strategy.

Discussions will likely centre around the promotion of yuan-based settlements and introducing its early-stage stablecoin to member states as Beijing pushes for a multipolar financial landscape that is less dependent on Western financial systems.

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People’s Bank Of China To Lead The Charge

According to the report, the People’s Bank of China and other domestic regulators will implement the plan.

This sudden pivot to stablecoins is in contrast to China’s blanket ban on crypto, first introduced in 2021 and recently reinforced.

In 2021, Chinese authorities enforced a ban on crypto trading and mining due to concerns regarding speculative risks and financial stability.

The ban specifically targeted decentralised, privately issued assets that were beyond regulatory control. In contrast, their pivot to stablecoin represents centralised control where authorities can leverage blockchain’s technical advantage.

In this situation, the state is repurposing crypto, without adopting its ethos to realise its geopolitical objectives.

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