Chinese Tech Giants JD and Ant Group Push Central Bank to Launch Yuan Stablecoins Against Dollar Dominance

Chinese e-commerce companies JD and Ant Group have been petitioning the People’s Bank of China (PBOC) to approve Yuan-based stablecoins, aiming to compete with US dollar stablecoins that currently dominate the market. E-commerce companies suggest that the PBOC should allow Hong Kong to circulate Yuan stablecoins to strengthen the currency globally and push back against US dollar stablecoins. JD executives met with PBOC officials to emphasize the importance of stablecoins in promoting global currencies. Currently, most stablecoins in circulation are pegged to the US dollar.

US stablecoins, such as USDT and USDC, represent over 99% of the stablecoin ecosystem. This presents a problem for economists who wish to promote a multipolar world. US dollar stablecoins may have dominated the market because exchanges used them to facilitate trades between pairs, such as those involving BTC and USDT. The US dollar was likely used because most of the early Bitcoin developers were based in the United States. It makes sense to have Yuan stablecoins because China is the second-largest economy in the world and may soon overtake the United States. However, according to SWIFT data, US dollar trades represent 48.46% of the market, while Yuan trades represent only 2.89% of the market. SWIFT is an ISO accredited international payment system.

Wang Yongli, the former head of the Bank of China, stated that if Yuan payments remain less efficient than US dollar payments, China will be exposed to strategic risk. Yuan global payments, according to SWIFT, declined to 2.89% in May, the lowest level in two years. Whereas, US dollar global payments remained steady at 48%. Meanwhile, Hong Kong has made strides in promoting blockchain technologies. Hong Kong has released a strategic blueprint to promote Web3 technologies in the local region and develop talent by incentivising training programs. The blueprint described blockchain and web3 technologies as superpowers and called for leaders in the private sector to work with the government to address key priorities that benefit everyone. 

Pan Gongsheng, governor of the People’s Bank of China (PBOK), said last month that the boom in digital currencies and stablecoins poses large problems for regulators. PBOK has entertained the idea of an offshore Yuan stablecoin operating in Hong Kong. Ant Group, the FinTech wing of Alibaba, has already made plans to obtain licenses for stablecoin use in Hong Kong. Ant Group has also begun preparing for a possible offshore Yuan stablecoin as part of its adoption of digital assets and blockchain technology. JD, an e-commerce giant, has announced plans to obtain licenses for stablecoins, enabling cross-border payments and currency exchanges. These Chinese companies seem to be investing in stablecoin technology and would like to add Yuan-based digital assets to their list. 

China, meanwhile, has been promoting a multipolar world and win-win trade, as opposed to zero-sum games where one economy dominates world trade. PBOK governor Pan Gongsheng believes that a single currency use creates geopolitical risk for international trade. For this reason PBOK may take the advice from Ant Group and JD seriously, seeing US dollar dominance with stablecoins as a major risk factor. Stablecoins have experienced significant growth and are poised to expand globally. It may make sense to allow Yuan-based stablecoins to compete with other stablecoins, thereby balancing the playing field and providing consumers with more choices. China has been making efforts to create financial infrastructure that is independent of Western systems. Many investors have been shifting their focus to European and Asian markets to mitigate the negative effects of President Trump’s tariffs. Yuan-based stablecoins may further enable traders to invest in the Chinese market. Stablecoins are extremely useful for making international trades.