China's CNH Stablecoin Aims to Challenge Dollar Dominance in Global Trade

Governments are intensifying efforts to digitize fiat currencies as part of a global stablecoin competition. Financial technology firm AnchorX launched its AxCNH, the first regulated stablecoin pegged to the international yuan (CNH), at the Belt and Road Summit in China Hong Kong, according to Reuters. The token is designed to streamline cross-border transactions under China's Belt and Road Initiative (BRI), a $123.3 billion infrastructure project linking Asia, Africa, and Europe. The CNH stablecoin joins a South Korean won (KRW1) stablecoin introduced by BDACS, both of which are overcollateralized—backed 1:1 by fiat deposits or government debt held in custodial accountsFirst Chinese CNH stablecoin debuts as global race heats up^[1].

AnchorX's AxCNH received in-principle approval from Kazakhstan’s financial regulator in February 2025, marking the first stablecoin-related authorization in the countryConflux 3.0 Launches with Offshore Yuan Stablecoin for Belt and Road Initiative^[2]. The stablecoin will be integrated into the Conflux Network ecosystem and TokenPocket crypto wallet to expand accessibility in Central and Southeast Asia. Conflux, a Chinese public blockchain, also announced a partnership with fintech firm AnchorX and IT security company Eastcompeace to support the CNH stablecoin. Conflux 3.0, launched alongside the stablecoin, boasts a throughput of 15,000 transactions per second and natively supports AI agent invocation, enhancing smart contract automation and settlement efficiencyCNH-Backed Stablecoin Launched for Cross-Border BRI Payments^[3].

The CNH stablecoin’s cross-border utility aligns with BRI’s economic strategy, which spans over 150 countries. Pilot projects are expected to prioritize trade and settlement between BRI participants, leveraging the stablecoin’s regulated framework to bypass traditional banking delays. Conflux’s move reflects a broader trend of Chinese tech firms, including JD.com and Ant Group, engaging in negotiations with the People’s Bank of China to issue yuan-backed stable assets. Meanwhile, Hong Kong’s new stablecoin regime, effective August 1, 2025, has attracted over 40 applications, including from Circle and Standard Chartered, as the city positions itself as a licensing hub“Conflux 3.0, a CNH Stablecoin, and the Belt & Road Bet: How China’s Web3 Dark Horse Just Sparked a New Stablecoin Race”^[4].

Geopolitical implications are significant. By digitizing the CNH, China aims to counter dollar-dominated stablecoins like Tether’s USDT, which has become a major U.S. Treasury bill holder. Analysts note that stablecoins enable governments to offset inflationary pressures by increasing fiat currency demand through blockchain accessibility. For China, the CNH stablecoin could reduce reliance on the U.S. dollar in trade settlements while reinforcing its financial sovereignty. However, risks include regulatory fragmentation and liquidity challenges, as success depends on secondary market depth and institutional adoptionFirst China Stablecoin Launches Amid Digital Geopolitical Race^[5].

The CNH stablecoin’s launch also highlights China’s strategic pivot toward state-controlled blockchain infrastructure. Unlike decentralized models, China’s approach prioritizes permissioned systems under centralized oversight, as seen in its e-CNY central bank digital currency (CBDC) and blockchain initiatives like AntChain and Tencent’s TrustSQL. While the e-CNY has struggled to gain traction against QR-code-based payment apps like WeChat Pay, CNH stablecoins offer a regulated alternative for offshore transactions, preserving capital controls while expanding global reachWhy China Is Spooked by Dollar Stablecoins and How It Will Respond^[6].

China’s cautious embrace of stablecoins contrasts with the U.S. GENIUS Act, which facilitates bank-issued dollar stablecoins. Chinese officials warn that such developments could strengthen the dollar’s dominance in global trade, undermining efforts to internationalize the yuan. By advancing CNH-backed stablecoins through Hong Kong, Beijing seeks to test tokenized renminbi circulation while maintaining control over capital flows. This strategy aligns with Shanghai’s recent discussions on stablecoin frameworks, indicating a potential softening of mainland regulations for state-linked enterprises.