China Weighs Yuan-Backed Stablecoins to Boost Global Trade Use

China may be taking its biggest step yet toward integrating digital assets into global finance. For the first time, policymakers are considering yuan-backed stablecoins as a tool to expand the currency’s global reach in trade and payments.

• China’s State Council will review a roadmap for boosting the yuan’s global role.
• The plan includes exploring yuan-backed stablecoins alongside the digital yuan.
• Stablecoins could support faster, cheaper cross-border settlements.
• Beijing aims to challenge the dominance of dollar-pegged tokens like USDT and USDC.
• Risks around hype, fraud, and compliance remain top of mind for regulators.
  

China’s State Council is expected to review — and possibly approve — a blueprint this month that would set specific targets for increasing offshore use of the yuan. According to Reuters, the roadmap includes introducing yuan-backed stablecoins into the global financial system. The plan would also assign regulatory responsibilities and outline safeguards to manage risks.

If approved, this would mark a major shift in Beijing’s digital asset strategy. Up to now, the government has tightly controlled innovation in the sector, favoring the central bank’s digital yuan (e-CNY) over private initiatives. But the potential benefits are clear: stablecoins provide near-instant, low-cost, 24/7 settlement, already serving as the backbone of crypto markets where dollar-pegged tokens dominate. A regulated yuan-backed alternative could give Chinese trade and payments a competitive edge, while maintaining oversight inside the country’s compliance perimeter.

The urgency is rising as China’s share of global payments slipped to just 2.88% in June, its lowest in two years, far behind the U.S. dollar’s 47% share, according to SWIFT. At the same time, the U.S. has advanced its own stablecoin regulations under the GENIUS ACT, putting added pressure on Beijing to clarify its stance. Meanwhile, Hong Kong has been building a licensing regime to attract stablecoin issuers, while the People’s Bank of China continues scaling e-CNY pilots and establishing an international center to expand its influence.

Still, risks remain. Chinese regulators are cautious about privately issued tokens, citing investor hype, illicit finance, and fraud concerns. Mainland authorities have already cracked down on stablecoin promotions this summer, signaling that any move forward will come with tight controls.

Final Thought:

China’s consideration of yuan-backed stablecoins could be a watershed moment in the global currency race. If Beijing greenlights the move, it would challenge the dollar’s dominance in digital finance and reshape cross-border trade dynamics. But balancing innovation with control will be the test — and the world will be watching.