China’s Stablecoin Strategy: A Defensive Move Against Dollar Dominance

China's increasing interest in stablecoins reflects a strategic pivot to safeguard its currency from U.S. dollar hegemony rather than an embrace of cryptocurrency, according to Dr. Vera Yuen of Hong Kong University. The focus on yuan-backed stablecoins underscores Beijing's recognition of their utility in cross-border transactions, a domain where the digital yuan (e-CNY) faces limitations.

The State Council is reportedly reviewing a framework for yuan-pegged stablecoins, with Hong Kong and Shanghai poised to lead adoption. This shift follows the U.S. GENIUS Act, which institutionalized dollar-linked stablecoins, pressuring China to accelerate its own regulatory response. Animoca Group's Evan Auyang notes the law has forced Beijing to reevaluate stablecoins as critical infrastructure for global trade—not mere speculative tools.