US crypto push spurs Chinese reassessment regarding stablecoin use

China is under increasing pressure from prominent economists and policy advisers to explore using stablecoins for cross-border payments, as the United States accelerates efforts to entrench the dollar’s global dominance through crypto innovations.

Though China continues to enforce a sweeping ban on cryptocurrency activities, recent comments from senior People’s Bank of China (PBOC) officials have reignited debate over stablecoins — digital assets typically pegged to fiat currencies like the US dollar.

PBOC Governor Pan Gongsheng recently acknowledged that stablecoins could “revolutionize international finance,” especially in a geopolitical climate where traditional payment systems are vulnerable to weaponization through sanctions. 

Pan highlighted the strategic importance of building alternative infrastructure to avoid such risks, speaking at the Lujiazui Forum in June,

Former PBOC chief Zhou Xiaochuan also spoke at the event, warning that dollar-linked stablecoins might facilitate dollarization. At the same time, other officials floated the idea of yuan-based stablecoins to boost China’s ambitions of internationalizing its currency.

US crypto push spurs Chinese reassessment

The renewed focus in China comes as the US doubles down on its digital dollar agenda. Just hours before Chinese officials addressed the Lujiazui Forum, the US Senate passed a landmark bill to regulate stablecoins — a major win for the crypto industry and President Donald Trump’s digital asset strategy.

US Treasury Secretary Scott Bessent further amplified support, claiming that stablecoins could strengthen the dollar’s role, not undermine it. He cited greater trust in the US regulatory oversight compared to centralized digital currencies like the e-CNY.

Stablecoins, already gaining ground for their ability to make cross-border payments faster and cheaper, are forecasted to grow to $3.7 trillion in supply by 2030, with most currently backed by US dollars and short-term Treasuries.

Hong Kong emerges as a launchpad for China’s stablecoin ambitions

Beijing has historically viewed crypto as a threat to capital controls and financial stability. Yet experts now see a critical opportunity.

Robin Xing, Chief China Economist at Morgan Stanley, noted that stablecoins are not new currencies, but new distribution channels for existing ones. China must embrace sovereign currency tokenization to stay competitive.

Xing and others suggest that Hong Kong could be a regulatory sandbox for offshore yuan-linked stablecoins. Hong Kong has already introduced a legal framework for fiat-referenced stablecoins, and tech giants like JD.com and Ant Group are reportedly preparing license applications.

JD.com’s Chief Economist Shen Jianguang warned that China risks falling behind without a serious push into stablecoins. Founder Richard Liu has said the firm aims to cut cross-border payment costs by 90% and reduce settlement times to under 10 seconds using stablecoins.

Meanwhile, Zhejiang China Commodities City Group Co., operator of the world’s largest wholesale market, also announced intentions to enter the space via licensing.

China pushes ahead with dual-track digital strategy 

China’s current digital currency efforts have struggled to gain traction. The e-CNY, the state-backed digital yuan, has seen limited adoption. At the same time, mBridge, a cross-border project with several central banks, faced uncertainty after the Bank for International Settlements (BIS) withdrew over concerns that it could be used to skirt sanctions.

Despite setbacks, Pan announced plans for an international e-CNY center in Shanghai, signaling Beijing’s continued ambitions in digital finance.

To move forward, experts suggest a dual-track strategy. The National Institution for Finance and Development Chairman Li Yang said China should expand traditional efforts like CIPS and currency swaps while leveraging Hong Kong’s capabilities to pilot yuan stablecoins.

According to Bloomberg Intelligence, Hong Kong’s stablecoin efforts could become Beijing’s alternative to sidestep SWIFT, alongside CIPS and mBridge.

Still, hurdles remain. Stablecoins are currently used more for crypto trading than global commerce. Regulatory uncertainties persist, especially regarding whether they qualify as currencies or financial instruments.

Eswar Prasad, a Cornell professor and author of The Future of Money, cautioned that yuan-linked stablecoins may struggle without deeper reforms. “Without unifying onshore and offshore yuan markets, these stablecoins won’t gain much traction,” he said

Yet he also believes they may catalyze reform, nudging China toward more market-oriented policies. As the US continues to cement its lead in the digital currency race, China is now at a critical crossroads in either cautiously observing or stepping boldly into the future of global finance through stablecoin innovation.

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