China's Tech Giants Push for Yuan-Backed Stablecoin in Hong Kong

China, facing external pressures from tariffs, semiconductor wars, and Middle East oil supply tensions, is quietly refining a powerful monetary weapon: the yuan-backed stablecoin. This initiative is part of a broader strategy to challenge the dominance of the U.S. dollar in international payments and to support the internationalization of the yuan.

JD.com and Ant Group, two of China's tech giants, have been lobbying the People’s Bank of China (PBOC) to approve a stablecoin based on the offshore yuan. Their goal is to launch this stablecoin from Hong Kong, which has become a regulated ground for stablecoins as of August 1, 2025. This move is seen as a geopolitical opportunity to free themselves from the digital dollar, which currently dominates the stablecoin market.

Hong Kong's new Stablecoins Bill, adopted on May 21, 2025, regulates stablecoin issuers with mandatory reserves, audits, and total transparency. This legislation is designed to attract institutional investors and reassure governments, making it an ideal testing ground for China's stablecoin ambitions. JD.com and Ant Group are already competing to obtain the necessary licenses to operate in this regulated environment.

For the PBOC, Hong Kong serves as a legal and technological mirror, allowing China to observe the effects of stablecoin regulation without directly controlling the market. This approach is seen as a way to test the waters before potentially launching a stablecoin nationally. The PBOC's monetary advisor, Huang Yiping, has noted that China's capital account is not fully liberalized, making a national stablecoin launch challenging.

Behind China's push for a yuan-backed stablecoin lies a dual agenda: economic and political. Economically, it aims to meet the growing demand from Chinese exporters who use USDT to circumvent capital controls and limit currency risks. Politically, it seeks to weaken the dollar's dominance in international payments. The yuan currently represents only a small fraction of global payments, while dollar stablecoins cover the majority of the market.

Ant Group plans to obtain licenses in Singapore, while JD.com proposes testing the yuan stablecoin in Hong Kong before deploying it in mainland China’s free trade zones. Strategic partnerships, such as the one between North King and GoFintech, are developing wallets and protocols for stablecoins that comply with Chinese standards. This ecosystem is designed for export but is calibrated in Beijing, reflecting China's vision of control and security.

As dedollarization accelerates globally, with rivals to SWIFT and tightening regulations on dollar stablecoins in Europe, China's yuan-backed stablecoin represents a concrete step towards an alternative monetary system. This state token, programmable and compatible with Beijing's vision of control, is poised to play a significant role in the future of international payments.