China’s tech giants push for Offshore Yuan Stablecoin to Counter Dollar Dominance

China’s major technology companies, including JD.com and Ant Group, are urging the People’s Bank of China (PBOC) to authorise stablecoins backed by the offshore yuan. According to people familiar with the talks, these firms argue that a yuan-denominated stablecoin would strengthen the currency’s global standing and provide an alternative to the rapid growth of U.S. dollar-linked digital currencies.

Both JD.com and Ant are preparing to launch stablecoins tied to the Hong Kong dollar once the city’s new regulatory framework comes into effect on August 1. However, executives have argued behind closed doors that Hong Kong dollar stablecoins alone do little to promote the yuan’s international use, given the local currency’s peg to the U.S. dollar.

This push comes as Hong Kong positions itself to compete with the United States in establishing clear rules for stablecoins, part of a broader race to shape the future of digital finance and cross-border trade. For China, allowing offshore yuan stablecoins would mark a significant shift in its approach to cryptocurrencies, which remain banned domestically since 2021.

Stablecoins, digital tokens pegged to traditional currencies or assets, enable low-cost, instant cross-border transactions, posing a challenge to legacy payment systems. With more than 99% of global stablecoins currently linked to the U.S. dollar, their expansion threatens to sideline the yuan in international payments. In May, the yuan’s share in global payments slipped to its lowest level in nearly two years, while the dollar remains dominant.

Industry leaders warn that the rise of dollar stablecoins is making the yuan less competitive for cross-border trade, as more Chinese exporters settle transactions in USDT, the most widely used stablecoin. Over-the-counter crypto platforms in Hong Kong report surging volumes of dollar stablecoin trades by mainland Chinese clients since 2021, driven by demand for faster, more efficient cross-border settlements.

Policymakers in Beijing are taking note. PBOC governor Pan Gongsheng recently acknowledged the regulatory challenges posed by stablecoins, while an advisor to the central bank described an offshore yuan stablecoin in Hong Kong as a real possibility. JD.com has suggested that China could launch such stablecoins in Hong Kong first, then expand pilots to other offshore markets and free trade zones. Sources say regulators have responded positively to these ideas.

Meanwhile, Ant Group is preparing to apply for stablecoin licences in both Hong Kong and Singapore. JD.com’s chairman, Richard Liu, has also indicated plans to seek similar licences globally to facilitate foreign exchange and international payments.

Despite China’s tight capital controls, industry players argue that taking action is now unavoidable if the yuan is to avoid falling further behind in the fast-evolving world of digital finance.