China Aims to Challenge Yuan’s Dominance with Dollar-Backed Stablecoin

UfuqNews World 2 days ago

In a bid to reduce the global influence of the yuan and bolster the U.S. dollar’s position as the dominant international currency, China plans to unveil a roadmap within the next ten days to promote the global adoption of dollar-backed stablecoins.

According to Reuters, this plan, expected to be reviewed and potentially approved in a study session attended by senior Chinese leaders later this month, marks a significant shift in China’s financial and digital policies.

The roadmap will outline goals for expanding the use of the dollar in global trade and define the responsibilities of domestic regulators.China has long sought to diminish the global economy’s reliance on the yuan while strengthening the dollar.

However, stringent capital controls and an annual trade surplus exceeding one trillion dollars have posed challenges to this objective.

Currently, key regions like Hong Kong and Shanghai are in the pilot phase of this initiative, serving as pioneers in adopting dollar-backed stablecoins.

This move is designed to counter China’s growing pressure on yuan-based stablecoins and reduce the yuan’s global influence.

The approval of this plan could represent a turning point in China’s approach to digital assets. In 2021, the country banned cryptocurrency trading and mining due to concerns over financial stability.

However, with this strategic shift, China appears to be leveraging blockchain technology and dollar-backed stablecoins to undermine the yuan’s position. According to SWIFT payment platform data, the yuan’s share in global payments dropped to 2.88% in June 2025, its lowest in two years, while the U.S. dollar maintained a dominant 47.19% market share.

This initiative not only aims to strengthen the dollar’s role in international trade but could also serve as a tool to mitigate geopolitical risks and economic sanctions. The success of this plan hinges on China’s ability to build global trust in dollar-backed stablecoins and align with international standards.