This is China's plan to use stablecoins and make the yuan a global currency.

China is considering authorizing yuan-backed stablecoins in a strategic shift to internationalize its currency and compete with the dollar. The State Council will review a key roadmap this month.

After years of severe restrictions on digital assets, including a ban on Bitcoin and cryptocurrency trading and mining in 2021, China could be on the verge of a historic shift. 

According to sources cited by Reuters, the Council of State will review this month a roadmap that contemplates for the first time the Authorization of yuan-backed stablecoinsThis move not only redefines the country's stance toward cryptocurrencies, but also reveals a clear geoeconomic ambition: to make the yuan a competitive global currency against the dominance of the US dollar.

The plan, according to sources, offers Specific objectives for the use of the yuan in international markets, the allocation of regulatory responsibilities to national agencies, and specific guidelines for preventing risks in cross-border flows and convertibility processes. 

In parallel, a high-level study session is expected at the end of August, where the political tone and application limits of these new digital tools will be defined. With Hong Kong and Shanghai as potential regulatory laboratories, the project could mark the beginning of a new era in Chinese monetary policy, with implications that transcend the crypto space and extend to the global financial landscape.

From Prohibition to Strategic Design: China's Surprising Turn

The evolution of Chinese policy toward digital assets has been marked by a narrative of control and containment. In 2021, the country imposed a total ban on cryptocurrency trading and mining, citing concerns about financial stability and aggressive consumption. 

However, the global context has changed. The United States has made progress in regulating stablecoins. under the Trump administration and the GENIUS Act, consolidating a legal framework that allows its use in payments, commerce, and financial services. This development has generated geopolitical pressure on China, which is now seeking to catch up and position the yuan as a viable alternative in the digital ecosystem.

The roadmap to be reviewed by the State Council this month represents a paradigm shift. For the first time, it contemplates the authorization of yuan-backed stablecoins, with explicit objectives of monetary internationalizationThe document includes guidelines for allocating regulatory responsibilities among agencies such as the People's Bank of China, the Securities Regulatory Commission, and the Ministry of Commerce. It also establishes guidelines for risk prevention, particularly regarding cross-border flows and convertibility, two key aspects of maintaining control over the capital account.

However, this approach does not imply a complete opening to the crypto ecosystem, but rather an institutional design strategy that seeks to take advantage of the benefits of stablecoins without compromising financial sovereignty. 

Rather than competing with Bitcoin or Ethereum, China aims to create a digital infrastructure that strengthens the use of the yuan in international transactions, bilateral trade, and multilateral agreements. Therefore, the official narrative focuses on the utility, efficiency, and global reach of the Chinese financial system, rather than speculation or decentralized innovation.

Stablecoins as a geoeconomic tool: the yuan versus the dollar

The motivation behind the Chinese government's shift is not merely technological, but geoeconomic. According to SWIFT data, the yuan represents just 2,88% of global payments, while the dollar dominates with 47,19%. This gap reflects not only the dollar's historical hegemony, but also the yuan's lack of full convertibility and its limited presence in international trade agreements. 

Yuan-backed stablecoins are presented as an intermediate solution, allowing for expanded use of China's sovereign currency without fully opening the capital account, while maintaining control over financial flows.

In this context, stablecoins are seen as strategic instruments to facilitate international payments, reduce transaction costs, and strengthen the yuan's presence on digital platforms. The plan contemplates the creation of issuance, custody, and settlement protocols that guarantee traceability and interoperability with existing financial systems. Additionally, the possibility of integrating these stablecoins into bilateral agreements with countries where China already has a significant commercial presence is being studied.

The high-level study session scheduled for the end of August This will be key to defining the project's political tone. The country's leaders are expected to set clear limits on the use of stablecoins in business, international trade, and financial services. 

Likewise, Hong Kong and Shanghai could lead regulatory pilots, leveraging their more flexible legal frameworks and experience in financial innovation. Although the stablecoin market is dominated by the dollar, it's worth remembering that Hong Kong launched a new stablecoin licensing regime earlier this month, which could help accelerate the adoption of blockchain-based financial infrastructure, with implications for central banks, multilateral institutions, and private sector players.

In narrative terms, China's recent proposal represents an evolution of its discourse on digital assets, from prohibition to strategic integration. It appears that the vision is no longer defensive, but proactive, with an emphasis on utility, efficiency, and international reach. While key definitions and challenges remain, the fact that the State Council is considering this stablecoin-based roadmap marks a turning point for the market.