The Silent Shift: China's Stablecoin Plan to Boost Yuan in World Trade
- Keyword Financial
- Aug 20
- 4 min read
Introduction
China is considering a significant policy shift by allowing the use of yuan-backed stablecoins to promote the global adoption of its currency, according to recent reports. The State Council, China’s top government body, is expected to review a roadmap that would set targets for international yuan usage, assign regulatory responsibilities, and establish risk management guidelines. This move comes as China seeks to catch up with the U.S. in the digital currency space, where dollar-backed stablecoins currently dominate over 99% of the global supply. Hong Kong and Shanghai are positioned as pilot zones for the rollout, with Hong Kong’s new stablecoin regulations and Shanghai’s digital yuan hub leading local implementation efforts (Reuters, Benzinga).
The introduction of yuan-backed stablecoins is seen as a tool to increase the yuan’s share in global payments, which recently fell to 2.88%—its lowest in two years—while the U.S. dollar remains dominant at over 47%. Stablecoins, which are digital tokens pegged to fiat currencies, offer instant, low-cost, and borderless transactions, making them attractive for cross-border trade, e-commerce, and supply chain finance. By leveraging stablecoins, Chinese exporters and international businesses could settle transactions directly in yuan, reducing reliance on the U.S. dollar and minimizing currency conversion costs and risks (Cryptonews, IndexBox).
This policy shift reflects China’s broader ambition to internationalize the yuan and respond to the growing influence of U.S. dollar-linked stablecoins in global finance. The plan is expected to be discussed at the upcoming Shanghai Cooperation Organisation summit, with details to be unveiled in the coming weeks. If implemented, yuan-backed stablecoins could reshape the landscape of cross-border payments, offering new efficiencies for businesses and potentially challenging the dollar’s dominance in international trade (Benzinga, Reuters).
