Yuan-Backed Stablecoins and the Future of Cross-Border Energy Trade

China’s strategic pivot toward yuan-backed stablecoins is not just a financial experiment—it’s a calculated geopolitical maneuver to reshape global trade dynamics. By leveraging blockchain infrastructure and regulatory innovation, Beijing aims to reduce the U.S. dollar’s dominance in energy markets, particularly in cross-border oil and commodity settlements. For investors, this represents a high-stakes opportunity to capitalize on a system-wide shift in monetary power.

The Geopolitical Imperative

China’s push for yuan-backed stablecoins is rooted in its broader ambition to internationalize the renminbi (RMB). With the U.S. dollar accounting for over 99% of global stablecoin volume [1], Beijing faces a critical challenge: how to compete in a digital-first era where currency velocity and transaction efficiency determine economic influence. The answer lies in the Belt and Road Initiative (BRI), which serves as a testing ground for yuan-backed stablecoins in energy trade. PetroChina, one of China’s largest state-owned energy firms, is already exploring these tokens for cross-border settlements, aiming to bypass traditional dollar-based systems [2]. This move aligns with Hong Kong’s newly enacted Stablecoins Ordinance, which mandates 100% reserve backing and real-time monitoring, creating a regulatory sandbox for innovation [3].

Blockchain as the Enabler

The technological backbone of this strategy is China’s blockchain infrastructure. Conflux, a leading blockchain firm, has launched AxCNH, an offshore yuan-backed stablecoin, through a partnership with fintech firm AnchorX. The Conflux 3.0 platform, capable of 15,000 transactions per second and supporting on-chain AI agent interactions, is critical to scaling these efforts [4]. This infrastructure not only facilitates high-speed cross-border payments but also integrates with China’s existing digital yuan (e-CNY) ecosystem, creating a hybrid system that bridges traditional and digital finance [5].

Investment Opportunities in the Yuan-Backed Ecosystem

The yuan-backed stablecoin market is projected to reach $2 trillion by 2028 [6], creating fertile ground for blockchain infrastructure and fintech firms. Key players to watch include:
1. Conflux (CFX): Its Conflux 3.0 upgrade and AxCNH stablecoin have already driven a 110% price surge in 2025, with institutional adoption accelerating [7].
2. AnchorX: As a fintech partner in AxCNH’s rollout, AnchorX is positioned to benefit from BRI-related trade corridors, particularly in Central Asia and Southeast Asia [8].
3. PetroChina: By adopting yuan-backed stablecoins for energy settlements, the firm could reduce transaction costs by up to 30% compared to SWIFT transfers [9].

Hong Kong and Shanghai are emerging as dual hubs for this ecosystem. Hong Kong’s regulatory clarity under the Stablecoins Ordinance has attracted firms like Ant International and JD.com to seek licenses for offshore yuan stablecoins [10], while Shanghai’s integration with e-CNY infrastructure ensures a seamless transition between digital and traditional finance.

Challenges and Risks

Despite the momentum, structural hurdles remain. China’s strict capital controls and the yuan’s limited global payment share (2.88% as of 2025) could slow adoption [11]. Additionally, geopolitical tensions—such as U.S. efforts to counter dollar displacement via the GENIUS Act—add regulatory uncertainty [12]. However, the controlled rollout through BRI corridors and Hong Kong’s regulatory framework provides a strategic buffer, allowing China to test and refine its approach without immediate backlash.

Conclusion

The yuan-backed stablecoin initiative is a masterstroke in China’s quest for monetary sovereignty. By combining blockchain innovation, regulatory agility, and geopolitical leverage, Beijing is building a parallel financial system that could redefine cross-border energy trade. For investors, the key is to focus on infrastructure providers like Conflux and fintech firms with BRI exposure, while hedging against capital control risks. The next decade may well see the yuan-backed stablecoin emerge as a cornerstone of a multipolar global economy.

Source:
[1] China considering yuan-backed stablecoins to boost global currency usage [https://www.reuters.com/business/finance/china-considering-yuan-backed-stablecoins-boost-global-currency-usage-sources-2025-08-21/]
[2] China's Strategic Push for Yuan-Backed Stablecoins in Global Trade [https://www.ainvest.com/news/china-strategic-push-yuan-backed-stablecoins-global-trade-assessing-investment-potential-blockchain-infrastructure-fintech-firms-2508/]
[3] Hong Kong’s Stablecoins Ordinance and Conflux’s AxCNH stablecoin [https://www.ainvest.com/news/hong-kong-strategic-stablecoin-licensing-framework-implications-fintech-cross-border-payments-2508/]
[4] Conflux Launches Offshore Yuan Stablecoin for Belt and Road Initiative [https://www.ainvest.com/news/conflux-launches-offshore-yuan-stablecoin-belt-road-initiative-2507/]
[5] China's Digital Yuan: Shifting Global Currency Power [https://www.orfonline.org/expert-speak/china-s-digital-yuan-shifting-global-currency-power]
[6] China's Strategic Push for Yuan-Backed Stablecoins in Global Trade [https://www.ainvest.com/news/china-strategic-push-yuan-backed-stablecoins-global-trade-assessing-investment-potential-blockchain-infrastructure-fintech-firms-2508/]
[7] Conflux Network’s v3.0.0 and v3.0.1 hardfork details [https://coinmarketcap.com/cmc-ai/conflux-network/latest-updates/]
[8] Conflux announces plan to launch a yuan-backed stablecoin [https://www.mitrade.com/insights/news/live-news/article-3-975701-20250722]
[9] China's Energy Sector and the Rise of Stablecoin in Cross-Border Payments [https://www.ainvest.com/news/china-energy-sector-rise-stablecoin-cross-border-payments-strategic-convergence-fintech-sustainability-2508/]
[10] China Softens Stance: What A Yuan-Backed Stablecoin Dream Could Mean For Global Fintech [https://www.forbes.com/sites/digital-assets/2025/08/21/china-softens-stance-what-a-yuan-backed-stablecoin-dream-could-mean-for-global-fintech/]
[11] China considers legalising yuan-backed stablecoins: reports [https://aibc.world/news/china-seeks-to-approve-yuan-backed-stablecoins/]
[12] China's Strategic Pivot to Stablecoins and the Rise of Yuan [https://www.ainvest.com/news/china-strategic-pivot-stablecoins-rise-yuan-denominated-digital-assets-geopolitical-financial-infrastructure-disruption-2508/]