Stablecoins are attracting renewed attention in China, with leading economists and policymakers telling the country to pay attention to them when it comes to global cross-border payments.
The rising power of dollar-based stablecoins and the new actions of the United States toward regulating them gave an extra impetus to China’s digital currency approach.
People Bank of China (PBOC) top officials have pointed to the possibilities of reshaping international financial infrastructure through the use of stablecoins. In a speech at the recent Lujiazui Forum, PBOC Governor Pan Gongsheng admitted that stablecoins have a potential solution to geopolitical perils in the traditional payment system. Zhou Xiaochuan, former Governor of the PBOC, worried that dollar-pegged stablecoins would provide further dollarization, leading to suggestions of yuan-pegged stablecoins.
US developments drive reassessment in China
The US has moved towards regulating stablecoins, strengthening the position of the dollar in the global financial system. The US Senate, not long before the Lujiazui Forum, passed a significant bill that was all about the regulation concerning the stablecoins, and this was a part of the bigger strategy of President Donald Trump, as far as taking on the digital assets was concerned. The move was backed by the Secretary of the U.S. Treasury, Scott Bessent, who pointed out that under intense regulatory oversight, stablecoins will raise the global credibility of the dollar.
As stablecoins are predicted to have a supply of 3.7 trillion by 2030, most of this value is supported by US dollars and Treasury short-term bonds, causing pressure on China to act. Unless it changes, economists note, China risks being put at a disadvantage in the rapidly evolving global payments environment.
Hong Kong is positioned for stablecoin pilot projects
Professionals regard Hong Kong as a medium of stable tokens in China. There is already a legal framework surrounding the issuance of fiat-backed digital assets, therefore, the city could become home to the experiment with offshore yuan-pegged stablecoins. Firms like JD.com and Ant Group are also said to be gearing up to move into the space with regulatory applications.
JD.com’s management stressed that stablecoins would reduce the cost of cross-border payments by 90 percent and the settlement time to less than 10 seconds. The Zhejiang China Commodities City Group has not been left behind, and it has also demonstrated interest in pursuing a license to be involved with stablecoin-based activities.
China weighs dual-track digital currency strategy
The e-CNY, digital yuan offered by China, has hardly been used internationally. At the same time, the mBridge project has been negatively affected after the withdrawal on the part of the Bank for International Settlements. To counter this, China is considering a two-track approach that would entail the extension of existing methods, such as CIPS, and also pilot the development of stablecoin using Hong Kong. Analysts warn that stablecoins tied to the Yuan will require more extensive reforms in order to gain popularity, such as opening up the onshore and offshore yuan markets.