China promotes the RMB stablecoin plan, driven by global monetary ambitions leading to policy shifts.

According to a report by Reuters, China is considering allowing the issuance of a stablecoin backed by the yuan for the first time, a move that marks a significant shift in China's attitude towards digital assets. This action could become an important step for Beijing in achieving the internationalization of the yuan and elevating it to a true global currency.

Strategic policy shift

According to sources, the State Council of China is expected to review and possibly approve a roadmap later this month that outlines specific steps for expanding the role of the renminbi in the international market. The roadmap will set clear adoption targets, allocate responsibilities among regulatory agencies, and include risk prevention measures. In addition, senior Chinese leaders plan to hold a special meeting on the internationalization of the renminbi and stablecoins, which is expected to issue guiding opinions to shape the development and application of stablecoins in commerce and trade.

From cryptocurrency ban to embracing stablecoins

This potential policy stands in stark contrast to China's ban on cryptocurrency trading and mining in 2021. At that time, China imposed a comprehensive ban on cryptocurrency activities due to concerns about financial stability. However, stablecoins—a type of digital asset pegged to fiat currencies—have become an important tool in global finance. Currently, according to data from the Bank for International Settlements, dollar-backed stablecoins account for over 99% of the global supply.

If China implements this policy, the RMB-backed stablecoin may directly challenge the dominance of the US dollar in the global currency market, securing a place for the RMB in the global monetary landscape. However, analysts point out that China's strict capital controls remain the main obstacle to the widespread adoption of the RMB stablecoin.

Global stablecoin boom

Reuters reported that other Asian economies are also actively laying out stablecoins. South Korea has committed to allowing stablecoins backed by the won, and Japan is also developing related infrastructure. Meanwhile, Hong Kong – a special administrative region under Chinese jurisdiction – officially implemented a stablecoin regulatory framework on August 1. Sources revealed that Hong Kong and Shanghai will become key hubs for the promotion of the renminbi stablecoin, and the matter of cross-border usage is expected to be discussed at the Shanghai Cooperation Organization (SCO) summit in Tianjin later this month.

The geopolitical background of global currency competition

China's push for a stablecoin plan comes at a time of heightened geopolitical tensions with the United States. In the U.S., President Donald Trump has openly supported stablecoins and advocated for the establishment of a regulatory framework for dollar-pegged tokens. The U.S.'s proactive developments in the stablecoin space are seen as part of the reason for China to accelerate its own stablecoin strategy to ensure that the Renminbi maintains its global monetary competitiveness in the digital age.

Although the current stablecoin market is relatively small, at about $287 billion, Standard Chartered predicts that this market could reach $2 trillion by 2028. If Beijing advances its stablecoin plan backed by the renminbi, China is expected to capture a significant share of this growth while promoting the internationalization of the renminbi and entering the global currency competition.

Summary

China's shift from banning cryptocurrencies to considering allowing a renminbi stablecoin demonstrates its strategic ambitions in global currency competition. Despite challenges such as capital controls, the launch of a renminbi stablecoin could open new avenues for China in the digital finance sector while positioning it more favorably in the global currency race against the US dollar.