Paul Johnson China is quietly rethinking its digital currency strategy — and this time, it’s not about the e-CNY. Instead, Beijing is looking at stablecoins as a sharper tool for international trade, even as strict capital controls keep yuan-backed tokens confined to offshore experiments.
Why the Pivot Matters
For years, the e-CNY — China’s Central Bank Digital Currency (CBDC) — has been positioned as the nation’s flagship innovation. It gave Beijing full control, transaction traceability, and seigniorage benefits regulators love. But on the global stage, the e-CNY has run into a wall: cross-border use.
“Many CBDCs are developed for domestic use,” explains Dr. Vera Yuen of Hong Kong University’s Business School. “But for international use, there is a big problem of interoperability. Stablecoins, by design, are made to move internationally.”
That design makes them uniquely suited to challenge U.S. dollar dominance in trade and settlement — a core Chinese priority.
U.S. Push Spurs Beijing’s Response
Beijing’s renewed urgency comes after Washington’s GENIUS Act, which effectively cements dollar-pegged stablecoins as part of global finance. According to Animoca Group president Evan Auyang, this legislation has “pressured China to act a lot faster,” forcing a rethink of stablecoins not as speculative assets — as the People’s Bank of China once warned — but as critical financial infrastructure.
Reuters recently reported that China’s State Council is reviewing a roadmap for yuan-backed stablecoins this month, with Hong Kong and Shanghai tipped to lead early adoption.
Offshore-Only, For Now
Still, China’s heavy capital controls mean any yuan stablecoin will remain offshore, primarily tested in Hong Kong’s new digital asset regime. That gives Beijing a sandbox, but with limited offshore yuan (CNH) liquidity, the scope of stablecoin issuance remains thin.
“This would limit the issuance of offshore renminbi stablecoins, constraining its attractiveness as a means of payment,” Yuen warned.
Not Just China in the Game
China isn’t the only Asian heavyweight testing this path. Japan’s Monex Group is preparing a yen-backed stablecoin tied to government bonds, joining the likes of SBI and JPYC. Across the region, policymakers are racing to define the role of stablecoins in global trade before the U.S. dollar extends its lead.
Key Takeaways
Stablecoins vs e-CNY: The e-CNY works domestically; stablecoins are better suited for cross-border transactions.
U.S. Trigger: The GENIUS Act put dollar-backed tokens firmly into global finance, spurring China’s faster response.
Hong Kong as Lab: Offshore yuan liquidity remains limited, narrowing the impact of a CNH stablecoin.
Regional Competition: Japan and others are joining the stablecoin race, signalling an Asia-wide digital currency arms race.
Beijing’s play is clear: stablecoins may be the bridge to international relevance the e-CNY never built. But whether limited offshore yuan liquidity can sustain that ambition is the billion-dollar question.
