Chinese "IT Giants" Tech Companies' Active Moves
Yuan Stablecoin to "Change 99% Dollar Dominance"
China's largest e-commerce company JD.com and Alibaba affiliate Ant Group have been revealed to be persuading their country's central bank, the People's Bank of China, to issue a yuan stablecoin based in Hong Kong Special Administrative Region.
Both companies proposed issuing a stablecoin linked to offshore yuan (CNH) in Hong Kong. This move comes amid competition between China and the United States in establishing stablecoin regulatory frameworks, and is interpreted as a strategy to expand the yuan's influence in global financial markets and challenge the US dollar's dominance in digital payment markets.
JD.com emphasized during private negotiations with the People's Bank that issuing an offshore yuan stablecoin is urgent for yuan internationalization. They particularly pointed out that the Hong Kong dollar (HKD) is pegged to the US dollar, which does not help promote yuan usage, and argued for the necessity of a yuan-based stablecoin.
Stablecoins are digital tokens with fixed value anchored to liquid assets like dollars or gold, based on Block technology. This technology enables immediate, borderless, 24-hour fund transfers at low costs, holding potential to innovate existing international payment systems. Currently, the global stablecoin market is approximately $247 billion, with Standard Chartered Bank projecting growth to $2 trillion by 2028.
According to the Bank for International Settlements (BIS), over 99% of current stablecoins are dollar-based, and SWIFT data shows yuan's global payment currency proportion at 2.89% in May, the lowest in two years. In contrast, the dollar maintains a 48.46% market share.
The companies plan to first issue a stablecoin linked to the Hong Kong dollar when their new virtual asset law takes effect on August 1st. Their strategy is to gain stablecoin issuance and operation experience before expanding to a yuan-based stablecoin.
If this proposal is approved, it would signify a significant shift from China's 2021 cryptocurrency ban and is expected to reshape yuan internationalization strategies. Especially since Chinese export companies are already actively using dollar-based stablecoins like USDT, introducing a yuan-based stablecoin is anticipated to substantially expand China's influence in the digital financial market.
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