China secretly prepares yuan-backed stablecoins as global summit nears and insiders say it could rival the dollar

China, long known for its strict stance on cryptocurrencies, may be preparing one of the most surprising U-turns in global finance. According to sources cited by Reuters, Beijing is weighing the introduction of yuan-backed stablecoins — a step that could reshape global payments and directly challenge the US dollar’s dominance.

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The country’s State Council, its top policymaking body, is expected to review the proposal later in August. If approved, this would mark a historic departure from China’s 2021 ban on crypto trading and mining. Officials believe yuan-pegged stablecoins could accelerate the internationalization of the yuan, allowing it to compete with established reserve currencies like the US dollar and the euro.

Cross-border ambitions

One of the clearest use cases for a digital yuan-backed stablecoin would be cross-border trade and payments. China is already in talks with several countries to pilot stablecoin payments for international transactions. The topic is also expected to feature at the upcoming Shanghai Cooperation Organization (SCO) Summit, scheduled for August 31 to September 1 in Tianjin.

Priority hubs for rolling out this roadmap are expected to include Hong Kong and Shanghai — two of China’s most important financial centers.

Yuan’s global standing

As of June 2025, the Chinese yuan ranked sixth in global payments, accounting for just 2.9% of worldwide transaction value, according to Swift’s RMB Tracker. By comparison, the US dollar accounted for 47.2% of payments.

But the imbalance becomes more striking in the stablecoin market. Nearly 98% of the sector’s $288 billion market capitalization is tied to dollar-backed tokens such as Tether (USDT) and USD Coin (USDC), according to CoinMarketCap.

This is precisely where Beijing sees opportunity. By offering a yuan alternative, China hopes to weaken what People’s Bank of China (PBOC) governor Pan Gongsheng has described as the “excessive reliance on a single sovereign currency.”

Global rivalry with Washington

The timing is no coincidence. In the United States, Donald Trump has pledged to expand the dollar’s global reach through stablecoins, urging policymakers to cement America’s leadership in digital finance. China’s potential entry is seen as a counter-move to Washington’s ambitions.

A PBOC official in June acknowledged the transformative potential of stablecoins, signaling that approval could come sooner than many expected. This follows July’s announcement by Conflux, a Chinese blockchain platform, which launched a stablecoin tied to offshore yuan.

Meanwhile, Hong Kong regulators introduced a dedicated stablecoin framework on August 1, further fueling speculation that mainland China is aligning its policies with global trends.

The bigger picture

For Beijing, yuan-backed stablecoins are not just about technology — they are about geopolitics. With the US Dollar Index slipping earlier this year, Chinese policymakers see a window to expand the yuan’s role in global trade and finance.

The move could spark a new era of currency competition, where digital assets become tools of statecraft as much as innovation.

Whether China’s State Council approves the roadmap later this month will be watched closely not just by crypto enthusiasts but by central banks worldwide. If Beijing gives the green light, the world may witness the beginning of a digital currency rivalry unlike any seen before