TL;DR
- China faces pressure to use stablecoins in international payments as the U.S. strengthens its lead with new regulations.
- JD.com and Ant Group are seeking licenses in Hong Kong to issue yuan-backed stablecoins aimed at reducing costs and transaction times in global transfers.
- China’s official digital currency still struggles to gain adoption, and Beijing is working to avoid falling behind in a market dominated by dollar-backed stablecoins.
China is under significant pressure to integrate stablecoins into its international payment system while the United States consolidates its leadership in the market.
Although Beijing maintains a broad ban on cryptocurrencies, officials and economists acknowledge that these tools could reshape global finance. Stablecoins emerge as an alternative to lower costs and speed up cross-border transactions.
The governor of the People’s Bank of China, Pan Gongsheng, recently stated that stablecoins could transform international payment systems. Other officials, such as former governor Zhou Xiaochuan, warned about the risks that dollar-linked stablecoins could deepen dollarization.
For years, Beijing has sought to increase the yuan’s international presence, but its use remains limited outside Asia. Over 30% of China’s foreign trade was settled in yuan in February, yet its share in global payment systems remains low.
Will China Compete Against Stablecoin Dollarization?
In this context, companies like JD.com and Ant Group plan to apply for licenses to issue yuan-backed stablecoins in Hong Kong. The city approved a legal framework for these cryptocurrencies, potentially allowing Chinese firms to operate without violating Beijing’s strict capital controls. JD.com anticipates that these solutions could reduce international payment costs by 90% and cut settlement times to under 10 seconds.
Meanwhile, the United States advances its own regulation. The Senate passed a law formalizing stablecoin use, and Treasury Secretary Scott Bessent stated these tools not only do not threaten the dollar but can reinforce its dominance. Most stablecoins currently in circulation are backed by dollar assets and mainly used in crypto trading.
China faces the challenge of modernizing its financial infrastructure without losing ground in a market dominated by private issuers and dollar-linked assets. The country’s official digital currency, the e-CNY, still lacks significant adoption. At the same time, projects like mBridge, aimed at cross-border payments, face operational difficulties and tensions with international organizations
