Author: Martin

The global digital currency competitive landscape is quietly changing. China may allow the first-ever international debut of a renminbi-backed stablecoin, a move that will accelerate the internationalization of the renminbi and challenge the dominance of the US dollar.

On August 20, Reuters broke the significant news: The State Council of China will review and approve the roadmap for renminbi internationalization this month, with the core initiative being the first issuance of renminbi-pegged stablecoins to counter the global monopoly of US dollar stablecoins. This marks a 180-degree turn in China's attitude towards cryptocurrencies—from a "comprehensive ban on trading and mining" in 2021 to actively embracing financial technology innovation.

This initiative aims to enhance the global usage of the renminbi, fully aligning with the recent statements from the People's Bank of China, where the central bank governor publicly committed to expanding the international use of the digital renminbi and called for the development of a multipolar global monetary system.

Policy Breakthrough: From "Comprehensive Ban" to "Proactive Engagement"

More critically, the speed of policy implementation is experiencing "rocket-like acceleration":

• Traditional cross-border payment systems (like CIPS) take years to promote, while the stablecoin policy has moved from proposal to review in just a few weeks;

• Senior officials plan to hold a special meeting at the end of this month to delineate the commercial application boundaries and development framework for stablecoins.

This unexpected pace highlights the urgency for China to seize the discourse power in digital finance.

Parallel Tracks: The "Internal and External Coordination" of Digital Renminbi and Stablecoins, China is building a complementary digital currency system:

• Digital Renminbi (Central Bank Digital Currency): Focused on domestic payments and official cross-border clearing, currently piloted in 26 cities, covering 20% of the national population, with a recent establishment of an international operation center in Shanghai to enhance global services;

• Renminbi Stablecoin: Targeting offshore markets and unofficial cross-border scenarios, for example, Hong Kong has passed the "Stablecoin Ordinance," and companies like JD.com and Ant Group are applying for licenses, aiming to reduce cross-border settlement costs by 90% and improve efficiency to "second-level."

Central Bank Governor Pan Gongsheng clearly stated at the June Lujiazui Forum: Blockchain technology is driving the trend of "payment as settlement," and China needs to develop a multipolar monetary system to counter US dollar hegemony, paving the way for stablecoin policy.

Why Promote Stablecoins Now?

The renminbi's share in international payments remains low. SWIFT data shows that in June, the global payment share of the renminbi was only 2.88%, the lowest level in two years.

In contrast, the US dollar accounts for nearly half of global transactions, a disparity that is highly mismatched with China's status as the world's second-largest economy.

Stablecoins, with their characteristics of "payment as settlement" and "low transaction costs," have already shown potential to replace traditional banking systems in cross-border payments in emerging markets—over 70% of global users choose stablecoins for cross-border payments.

Cross-Border Payments: A Revolution from "Days" to "Seconds"

The pain points of traditional cross-border payments are precisely the breakthrough points for stablecoins:

• SWIFT System: Average time of 5 days, with fees as high as 6.35%;

• Stablecoin Settlement: Achieves "24/7" real-time arrival through blockchain, with costs of only $0.00025 per transaction.

China has launched a pilot for the "Rare Earth Dedicated Renminbi Stablecoin" (launched on August 1), covering an annual rare earth export value of $30 billion, targeting "Belt and Road" countries and the Japan-Korea market:

• Using a 1:1 full renminbi reserve, with the entire transaction traceable on-chain;

• Seamlessly integrated with the digital renminbi system, forming a "technology-trade-finance" closed loop.

Rare earths account for 88% of the global supply chain, and this move will directly convert trade demand into renminbi reserve demand, leveraging the dominance of US dollar settlements.

Geopolitical Financial Game: Hong Kong as the "Offshore Testing Ground"

Hong Kong plays the role of a "sandbox" for the renminbi stablecoin:

• The Legislative Council passed the "Stablecoin Ordinance" unanimously, allowing the issuance of multi-currency stablecoins (including renminbi);

• Middle Eastern oil merchants have already used renminbi stablecoins to pay for oil, with offshore market acceptance exceeding expectations.

This design cleverly avoids sovereign risk:

• Offshore renminbi only accounts for 3% of the total central bank currency, making the scale controllable;

• IP control is used to restrict domestic circulation, ensuring the effectiveness of capital controls.

The breakthrough of the renminbi stablecoin is not merely a simple technological upgrade but an extension of national credit into the digital space, as experts assert: "The foundation of currency internationalization is comprehensive national strength; technology is just an accelerator."

As Shanghai's digital renminbi center and Hong Kong's stablecoin sandbox progress in parallel, China is writing a key footnote for a multipolar monetary system with the combination of "sovereign digital currency + compliant stablecoin." This silent financial revolution may reshape the global power landscape for the next decade.

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