Chinese Tech Giants Push for Yuan-Based Stablecoins to Challenge US Dollar Dominance

Chinese tech giants JD and Ant Group have been actively advocating for the People’s Bank of China (PBOC) to approve the launch of yuan-based stablecoins. This initiative is driven by the desire to enhance the global role of the yuan and to challenge the dominance of the US dollar in digital payments. The proposed stablecoins would be pegged to the offshore yuan, aiming to improve the efficiency of cross-border yuan payments and to counter the expanding digital influence of the US dollar.

This push for yuan-backed stablecoins comes at a time when China is seeking to counterbalance the growing dominance of US dollar-pegged digital currencies. The stablecoin market, currently valued at $247 billion, is projected to surge to $2 trillion by 2028, driven by the increasing adoption of stablecoins in various financial applications, including trading, decentralized finance (DeFi), and crypto treasury functions. However, the market faces regulatory uncertainties and the development of central bank digital currencies (CBDCs) by various countries.

Executives in the industry have highlighted the strategic risk if cross-border yuan payments are not as efficient as dollar stablecoins. Wang Yongli, Co-chairman of Digital China Information Service Group and former Vice Head of the Bank of China, emphasized the importance of this push. Xiao Feng, Chairman of crypto exchange operator HashKey, echoed similar sentiments, stating that China can no longer avoid taking action.

If China’s lobbying push succeeds, it would mark a notable policy shift since Beijing’s 2021 crypto ban and could hint at a broader strategy to boost the yuan’s international relevance through digital finance. However, China’s aspiration to elevate the yuan as a global reserve currency continues to face significant hurdles, particularly due to the country’s tight capital controls. Although China ranks as the world’s second-largest economy, the yuan’s presence in global payment systems has diminished, falling to 2.89% in May, its weakest level in almost two years. In contrast, the US dollar still maintains a commanding 48.46% share.

As dollar-backed stablecoins gain traction among Chinese exporters, many of whom now prefer USDT for cross-border settlements, tech giants like Ant Group and JD.com are accelerating efforts to issue their own stablecoins to reclaim monetary ground. JD.com plans to launch a Hong Kong dollar-pegged stablecoin by year-end, while Ant Group is actively pursuing licenses in Hong Kong, Singapore, and Luxembourg to broaden its blockchain-based payment infrastructure. These moves align with a broader push to counter the digital dollar’s growing dominance.

China has been promoting a multipolar world and win-win trade, as opposed to zero-sum games where one economy dominates world trade. PBOK governor Pan Gongsheng believes that a single currency use creates geopolitical risk for international trade. For this reason PBOK may take the advice from Ant Group and JD seriously, seeing US dollar dominance with stablecoins as a major risk factor. Stablecoins have experienced significant growth and are poised to expand globally. It may make sense to allow Yuan-based stablecoins to compete with other stablecoins, thereby balancing the playing field and providing consumers with more choices. China has been making efforts to create financial infrastructure that is independent of Western systems. Many investors have been shifting their focus to European and Asian markets to mitigate the negative effects of President Trump’s tariffs. Yuan-based stablecoins may further enable traders to invest in the Chinese market. Stablecoins are extremely useful for making international trades.