98% vs 2%: Can China’s Yuan Stablecoin Break the Dollar’s Stranglehold?

Getting your Trinity Audio player ready...

• China explores yuan-backed stablecoin for cross-border payments.
• Experts warn 98% of stablecoin use remains USD-dominated.
• Trust and political reforms pose the biggest barriers.

China is reportedly considering launching a yuan-backed stablecoin, with early testing in Hong Kong and Shanghai. The move marks a surprising shift after years of cracking down on crypto while promoting the digital yuan (CBDC). But experts caution that overcoming the entrenched dominance of the US dollar in global finance will be a steep challenge.

Stablecoin Push Marks Strategic Shift

The news, first reported Wednesday, underscores Beijing’s ambition to expand the yuan’s international role. Yet China’s prior experiments with its CBDC faced limited adoption at home, largely due to the ubiquity of Alipay and WeChat Pay in everyday transactions.

A yuan-backed stablecoin could serve a different purpose. “The most interesting applications of a renminbi stablecoin are likely in cross-border payments,” said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics. Such a tool could, in theory, allow capital to move across borders outside traditional banking channels.

Barriers of Trust and Liquidity

Despite potential benefits, analysts warn of deep credibility and liquidity gaps. “Ninety-eight percent of all stablecoins and stablecoin transactions are dollar-based,” noted Patrick Tan, CEO of blockchain intelligence firm ChainArgos. Exchanges favored by Chinese users, including Binance and Bybit, overwhelmingly rely on USD-backed stablecoins.

Even if Beijing introduces a yuan stablecoin, concerns over state surveillance and capital controls remain. “If it comes with the same restrictions and oversight as the renminbi itself, it’s unlikely to compete with dollar-backed alternatives,” Chorzempa explained.

Political Limits to Reform

Tan stressed that real success depends on making the yuan attractive globally—an outcome requiring systemic political and economic reforms. Given China’s current climate, he said, such changes are “extremely challenging at best.”

For now, the effort highlights how stablecoins have evolved from crypto infrastructure into tools of geopolitical competition. Whether successful or not, Beijing’s experiment underscores that the future of money is increasingly contested on the digital front.

China’s yuan-backed stablecoin may strengthen cross-border payment options, but without trust, liquidity, and openness, it faces an uphill battle against the dollar’s entrenched dominance.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses