Briefing: Chinese Economists on Stablecoins, Sovereignty and the Future of the RMB
Insights from: 1. Li Yang; 2. Mu Changchun; 3. Peng Wensheng; 4. Liu Xiaochun; 5. Wang Yongli; 6. Zhou Xiaochuan; 7. Zhu Guangyao; 8. Fan Wenzhong; 9. Frank M. Song; 10. Huang Yiping
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The Trump administration’s relationship with the crypto community has been a source of fascination for scholars in China, both for what it reveals about the shifting political centre of gravity in the US, and for its implications for the future of the global financial system. Following the passage of the GENIUS Act by US Congress on 17 July, there are indications that Beijing is formulating a policy response. Shortly after the US legislation, the enactment of the Stablecoins Ordinance in Hong Kong established a licensing framework that will permit the issuance of stablecoins backed by the Hong Kong dollar and potentially the offshore renminbi.
Among senior economists in China, the role of stablecoins in reinforcing US dollar hegemony is seen as central to the case for a Chinese policy response. Yet a common refrain is that the proliferation of dollar-backed stablecoins may prove to be a “double-edged sword” for that very hegemony. On the one hand, they are broadening dollar applications and boosting demand for US Treasuries—as Scott Bessent has predicted. On the other, the finance professor Frank M. Song cautions that stablecoins will heighten fragility in the dollar system, possibly offering a future opening to the renminbi. Fan Wenzhong of the Beijing Academy of Social Sciences speculates that in the longer term, the institutionalisation of international crypto-payment systems will reduce reliance on SWIFT and lower the barriers to conducting transactions in non-dollar stablecoins.
“Dual-Wheel” Liberalisation: Maintaining the Financial Firewall
One worry hanging over China’s approach to stablecoins is that a larger crypto market could exacerbate the multi-billion-dollar illicit crypto trade in China, which has swelled since the 2022 crackdown and provides individuals with a means to bypass capital controls and transfer assets overseas. For this reason, privately issued stablecoins freely circulating across China’s borders are firmly off the table. Some scholars propose beginning with offshore renminbi stablecoins issued by Hong Kong–licensed exchanges, which authorities are already planning to use as channels for disposing of seized digital assets.
However, most Chinese economists assess that their country should focus primarily on expanding the international use of the digital renminbi—the country’s existing central bank digital currency (CBDC)—with offshore renminbi stablecoins playing only a supporting role. To preserve capital controls, offshore renminbi stablecoins would remain functionally distinct from the digital renminbi or any possible stablecoins in the domestic financial system—an arrangement that Fan characterises as a “domestic-international dual-wheel” (内外双轮) system. In the analysis of Mu Changchun, a senior PBoC researcher, the domestic expansion of the digital renminbi—as direct liabilities of the central bank—would further the “convergence of commercial bank and central bank money” and enhance the PBoC’s regulatory reach.
Clearly, such a state-managed approach would be anathema to the decentralisation narrative that surrounds cryptocurrencies in the US. Chinese scholars tend to be somewhat incredulous of this narrative, interpreting the GENIUS Act as Washington taking control of its crypto sector—though all the while remaining coy about it by officially prohibiting the Federal Reserve from issuing a CBDC. Former deputy governor of the Bank of China, Wang Yongli, believes that stablecoins are merely a “transitional product”, on the pathway to a global financial system comprising CBDCs trading over the blockchain. He urges China to capitalise on the current ban on them under US law to “seize the commanding heights” in that domain.
Stablecoin Sovereignty and Renminbi Internationalisation
Though such a multi-pronged system of exchange would certainly be complex to regulate, Li Yang of CASS dismisses the notion that stablecoins are “supranational” and threaten “monetary sovereignty”. Given that “no matter what coin the US issues, it cannot be directly used to purchase China’s products and services”, he argues that stablecoins cannot simply “bypass” foreign exchange. In effect, state control over China-minted stablecoins would establish regulated channels for trading with US dollar-backed stablecoins in the international system.
The policy response so far has reflected this emphasis on “monetary sovereignty”, including the mooted establishment of an international operations centre for the digital renminbi in Shanghai. mBridge, a CBDC-based international payments system, is already being developed between the PBoC and several other countries’ central banks. In October 2024, around the time when commentators were framing it as a potential anti-dollar BRICS vehicle, the Bank for International Settlements (BIS) exited the system and handed responsibility over to the central banks. Chinese policymakers may now seek to strengthen and expand the international use of the digital renminbi through this network.
China’s policymakers often look askance at financialisation in Western economies, emphasising the “real economy”. Song suggests that shares in electric charging stations and renewable energy projects offer particularly logical use cases for tokenised trading on the blockchain. Meanwhile, the senior financial researcher Peng Wensheng argues that, unlike the more “financial” attributes of dollar stablecoins, China’s digital platform-payment infrastructure is well-suited to deploying digital currencies in sectors aligned with the real economy, such as cross-border retail. Digital currencies are regarded as instruments to be managed—and potentially highly useful ones.
—James Farquharson
Executive Summary
Stablecoins are regarded as a major financial innovation and experts from the PRC warn that if the renminbi does not adapt it risks “falling behind” in the global digital-finance race.
Dollar-pegged stablecoins are framed as an “on-chain extension” of US monetary sovereignty, a new phase in the dollar’s global power comparable to earlier stages such as Bretton Woods, the petrodollar system and Treasury liquidity. Each token in circulation extends American influence into the “crypto world”.
Despite the narrative that stablecoins are inherently “supranational”, Chinese experts emphasise that state sovereignty remains decisive: taxation, foreign-exchange rules and issuance rights keep currencies bound to state power so long as governments choose to retain these rights.
Centralisation is seen as key, with central bank digital currencies (CBDCs) such as the digital renminbi (e-CNY) viewed as the long-term priority. CBDCs are expected to command greater trust than privately issued stablecoins:
The US GENIUS Act is interpreted as Washington’s effort to centralise control of its “crypto-community”, while the common decentralisation narrative is viewed with scepticism.
Stablecoins are treated as transitional products that will eventually give way globally to CBDCs, with the e-CNY acting as an important vehicle for renminbi internationalisation.
A two-track approach could emerge:
Hong Kong (offshore hub): support Hong Kong dollar stablecoins (linked to the US dollar) and pilot offshore renminbi stablecoins.
Shanghai (onshore hub): establish an international operations centre for the e-CNY and explore renminbi stablecoins issued by state banks and integrated with payment platforms such as Alipay and WeChat Pay.
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Denominating digital assets—such as equity in vehicle charging stations and renewable energy projects—in digital tokens is seen as a promising avenue for creating “real digital assets” with measurable economic value.
Stablecoins could complement existing international payment systems such as CIPS and mBridge.
China’s digital wallet-based payment platforms—Alipay and WeChat Pay—already function similarly to stablecoins and could be expanded to cross-border use with stablecoins or CBDCs as the currency medium.
Risks such as over-issuance, “herd effect” sell-offs linked to US Treasuries and “high-leverage amplification”—whereby the value of stablecoins that are deposited or exchanged outstrips the reserve asset—are seen as concerning. These are regarded as especially acute in the US where regulation may lag market expansion, making stablecoins a potential “double-edged sword” for dollar hegemony.
Chinese experts advocate strong regulation, including strict KYC/KYT/AML requirements, seamless convertibility into fiat or e-CNY, integration with digital IDs, full-reserve backing and restrictions on reserve investments—even preventing issuers from receiving any interest payments on reserve assets—to ensure that stablecoins remain payment instruments rather than “speculative vehicles”.
1. Li Yang
Takeaway: Stablecoins represent huge technological progress in the global financial system, with which the renminbi must actively engage to avoid “falling behind”
Name: Li Yang (李扬)
Year of birth: September 1951
Position: Chairman, National Institution of Finance and Development (NFID); Member of Academic Divisions, China Academy of Social Sciences (CASS)
Sources: National Institution for Finance and Development (6 June 2025); New Economist (21 June 2025); National Institution for Finance and Development (23 June 2025)
1. High-Tech Exorbitant Privilege?
Stablecoins represent the latest scientific and technological developments—which are the “primary productive force” (第一生产力) driving all human progress—in the financial system; China therefore needs an approach that prevents the renminbi from “falling behind” (落后) in the emerging global system of decentralised finance and digital currencies.
Although the GENIUS Act “consciously omits” (有意识地“忽略”) its centralising intentions, the legislation nonetheless means that the state has “grabbed control of the whole ‘crypto community’ [抓住了整个“币圈”]”.
The aim of the bill is to strengthen US dollar sovereignty by “extending seigniorage privileges into the blockchain world [将铸币税的特权延伸到区块链的世界]”.
Li: “In 1944, the Bretton Woods system backed the US dollar with gold. In 1971, the petrodollar system empowered the dollar through commodities. In the 1980s, US government debt provided a new source of liquidity for the dollar. Today, the mechanism of stablecoins has created, through blockchain technology, a new sphere of genuine applications for the dollar. Every dollar stablecoin circulating in cross-border payments represents an on-chain expansion of American monetary power [美元势力的链上扩张].”
2. Stablecoins and China’s Monetary Sovereignty
However, digital currencies need not pose a challenge to sovereign authority; for as long as states exist, there can be no supranational currency.
Li: “Some hold that stablecoins are a form of supranational currency that could infringe upon our monetary sovereignty [货币主权]. I do not share this view, because currency, as a socio-economic phenomenon, is in essence an expression of state sovereignty — this is its fundamental attribute. So long as this world continues to be made up of sovereign states, the sovereign attribute of money will not be extinguished [只要这个世界还是由主权国家构成，货币的主权属性便不会被消灭], and there can be no such thing as a ‘supra-sovereign currency [超主权货币]’.”
The arrival of stablecoins will not fundamentally alter the mechanism of state control over cross-border capital flows.
Li: “In cross-border payments, the problem of exchange between currencies cannot be bypassed.Put simply, no matter what coin the US issues, it cannot be directly used to purchase China’s products and services; it cannot [simply] stride over this foreign exchange fence [都迈不过去汇兑这个栅栏]. Hence, currency manifests itself very clearly as a form of state sovereignty.At root, a country’s economic sovereignty has two main elements: the right to tax and the right to issue currency. These two rights cannot be ceded [不能让渡]; losing either one would mean the ‘state ceasing to be a state’ [‘国将不国’].”
3. Positive Benefits for China: Domestic and International Uses
Domestically, China’s existing digital platform-payment infrastructure provides an ideal framework for regulating the development of digital currencies.
Stablecoins could be issued by certain state-owned banks while the proposed “international operations centre for the digital renminbi” (数字人民币国际运营中心) in Shanghai may serve as an experimental basis for clarifying the relationship between the digital renminbi, renminbi stablecoins and the existing platform-payment infrastructure.
Note: The governor of the People’s Bank of China, Pan Gongsheng, proposed this operations centre at the Liujiazui conference on 18-19 June, 2025.
Li: “It should be recognised that Alipay and WeChat Pay are both based on bank deposit accounts as their underlying assets [in digital wallets]. As deposits constitute the principal component of [these] currencies, they bear a strong resemblance to stablecoins. Provided that the institutional framework is designed appropriately, there should be no issue in allowing these official and private payment mechanisms to develop in a coordinated manner.”
Internationally, stablecoins should complement the China’s Cross-border Interbank Payment System (CIPS) and the digital renminbi, with Hong Kong providing a channel for connecting the digital renminbi with dollar stablecoins.
Li: “Since the Hong Kong dollar operates under a linked exchange rate system with the US dollar, a Hong Kong dollar-based offshore stablecoin is in essence closer to a US dollar stablecoin. This has both disadvantages and advantages [既有不利之处，也有有利的方面], but in fact there is considerable room for manoeuvre [存在着操作的巨大空间]. If this space is utilised appropriately, it may be possible to create a channel that “connects” [“打通”] US dollar stablecoins with renminbi stablecoins, thereby making a fresh contribution to the internationalisation of the renminbi.
2. Mu Changchun
Takeaway: All historic shifts in currency format have led to an initial proliferation of privately issued money followed by the triumph of the centrally issued currency
Name: Mu Changchun (穆长春)
Year of Birth: December 1972
Position: Director, Digital Currency Research Institute, People’s Bank of China
Sources: Caijing Mayflower (14 September 2025—from 13 September speech at the 2025 Inclusion · Bund Conference closed-door session on “New Applications of FinTech and Innovative Development of Central Bank Digital Currencies”)
1. Central Bank Control and “Monetary Singularity”
Digital currencies represent a historic shift in the form of currency, which have always been shaped by technology and economic change—from shells, to paper money (or Song Dynasty jiaozi (交子) ), to central bank notes.
These shifts have normally featured conflicts between officially minted money (官铸钱) and privately issued money (私铸钱), with the persistence of multiple private currencies undermining “monetary singularity” (货币单一性) and increasing fragility.
Mu: “Having multiple currency issuers within one country, each with a different asset quality, leads to currency values diverging… [Such a situation] increases transaction costs, weakens banking stability and introduces uncertainty into the role of money as a unit-of-account.”
Given the state’s role as the lender of last resort (最后贷款人); state-issued legal tender (央行发行的法定货币) has always won out over privately issued currency in these past transitions.
A centrally issued digital currency will allow the “real economy” (实体经济) to securely transition to the more efficient financial services offered by features such as token strings (币串) and a unified ledger (全局统一账本).
2. The Digital Merging of Commercial Banks with the Central Bank
Currently, the central bank is liable for backing the digital renminbi with reserves while commercial banks are responsible for carrying out anti-money laundering and providing payment services on digital wallets. For better management, the banks “should consider greater alignment of rights and responsibilities” (应该考虑实现责权利一致) .
Note: In practice, this would likely mean increased integration of the supervisory roles of commercial banks with the central bank through the means of digital currencies.
Digital technology, along with the role of the central bank as the lender of the last resort, has furthering the “convergence of commercial bank and central bank money” (商业银行货币与央行货币的融合趋势) so that “the boundaries between the two are blurrier by the day and gradually merging together” (二者界限日益模糊、逐步融合).
Mu: “… digital technology is further strengthening the central bank’s ability to guarantee commercial bank money, manage risk and maintain currency stability. In this sense, the rigid distinction between commercial bank liabilities and central bank liabilities is no longer appropriate.”
Nevertheless, a “two-tier structure” allowing commercial organisations a degree of regulatory space is required for innovation.
3. Improving Uptake: Interest Payments on the Digital Renminbi?
The digital renminbi currently operates under a full-reserve (100%准备金) system, meaning funds deposited into wallets are directly absorbed by the central bank and exchanged with the fiat reserves.
The digital renminbi is therefore non-interest-bearing, ensuring safety; however, “making households and firms hold idle and non-interest-bearing assets causes them to lose the time value of money” and disincentivises people from holding them.
As the digital renminbi’s volume in the economy grows, “[its] measurement framework should be upgraded” (应该对……计量框架进行升级) so that its monetary creation capacity (货币派生能力) may be increased.
Note: This likely entails expanding the monetary classification of digital renminbi—currently tied directly to central bank reserves with 1:1 convertibility—to include M1 and M2 monies.
3. Peng Wensheng
Takeaway: While dollar stablecoins rely on US dominance in financial networks, a renminbi stablecoin could employ China’s economies of scale in the “real economy”
Name: Peng Wensheng (彭文生)
Year of birth: 1966
Position: President, China International Capital Corporation (CICC) Research Institute; Member, Currency Board Sub-Committee under the Exchange Fund Advisory Committee (EFAC) of Hong Kong; Member, China Finance 40 Forum (CF40)
Sources: New Economist (22 July 2025)
1. A Mixed Forecast for US dollar Hegemony
Stablecoins may at first consolidate the US dollar’s position, but two possible brakes (阻力) exist:
Other countries are likely to undertake “retaliation” (反制) against dollar stablecoins if they threaten their currency “seigniorage” (铸币税) rights or their monetary policy.
As a digital product, stablecoins are highly susceptible to a “herd effect” (羊群效应) whereby massive sell-offs occur; stablecoin issuers may also turn to riskier collateral if US Treasury yields drop, increasing the systemic risk.
2. China’s Comparative Advantage in Crypto
China and the US have different comparative advantages, which will shape how stablecoins develop in their respective economies:
The US has economies of scale in international currency networks; the dominance of dollar-backed stablecoins is less a matter of technological superiority than simply an extension of the dollar’s role as the global reserve currency.
China has economies of scale in the “real economy” (实体经济) even though its position in international currencies is weaker; its “platform currency” (平台货币) infrastructure—Alipay and WeChat—which has strong links to the real economy, could be expanded into international payments in the form of the PBoC-issued digital renminbi.
The “exogenous force” (外生力量) of China’s central bank could be used to support the development of the cross-border payment platforms, building on China’s existing digital platform-payment infrastructure.
Peng: “Platform currencies based on third-party payment tools inherently possess characteristics of stablecoins [本身具有稳定币的特征]. Compared with US dollar stablecoins, their real economy characteristics are stronger [实体经济性较强] while their financial qualities are weaker [金融属性较弱]. Furthermore, empowered by the platforms, they have already developed a certain network effect. This is China’s comparative advantage.”
Hong Kong, as an international financial hub and the largest offshore renminbi market, could serve as a “controlled testing ground” (受控试验田) for a renminbi stablecoin.
4. Liu Xiaochun
Takeaway: Stablecoins may have some positive use cases but involve large risks; on the other hand, tokenised “traditional currency” can already carry out many of stablecoins’ functions
Name: Liu Xiaochun (刘晓春)
Year of birth: March 1969
Position: Deputy Dean, Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiaotong University; Former Vice Chairman and President, China Zheshang Bank (CZB) (2014-2018)
Sources: New Economist (25 June 2025); Caijing Mayflower (10 September 2025)
1. A Double-Edged Sword for Dollar Hegemony
Stablecoins currently occupy an ambiguous space between their crypto proponents’ “tech doublespeak” (“科技黑化”) narrative of decentralisation and the reality of evolving into a useful technology with mainstream adoption. The GENIUS Act’s goal is to strengthen supervision (加强监管) of, rather than “legalise” (合法化), stablecoins.
Liu: “Their move out of the virtual world—out of illusion—and towards real-world finance remains rather hesitant. They long to be brought into the fold, [被招安], yet wish to retain the freedoms of remaining outside the system [希望保留体制外的自由].”
The ideology surrounding cryptocurrencies simply disguises the fact that “stablecoins are, in essence, a promissory note” (稳定币本质上也是一种欠条) and a means of obtaining “free capital” (无成本资金) for the issuer, who can then invest this currency in other assets; these incentives create the obvious risk of over-issuance.
For this reason, the issuance of US dollar stablecoins is a “double-edged sword” (双刃剑) for the US Treasury market, heightening the potential for instability and “spillover” (外溢) of risk to overseas holders of stablecoins.
Fintech must “exorcise itself of demons” (去魅)—including the hype surrounding technologies like bitcoin—and “return to the essence of finance” (回归金融本质), namely the provision of technology that serves as a useful tool of exchange.
2. Institutions Come First; Innovation Second
Stablecoins may have positive use cases, but these need to be identified and developed first; otherwise, if a renminbi stablecoin were launched hastily it could result in an embarrassing scenario where “no one pays it any attention” (无人问津).
Aside from the obvious illegal uses and sanctions avoidance, stablecoins might be employed for purchasing tokenised Real-World Assets (RWA) on the blockchain; however, they are not indispensable.Hong Kong has already issued tokenised “digital green bonds” (数码绿色债券) and tokenised RWAs for renewable energy projects without the need of stablecoins; in fact, any tokenised transaction could be undertaken by tokenised fiat on a blockchain (a CBDC), instead of stablecoins.
Note: Hong Kong’s financial services sector has been selling and managing tokenised digital green bonds on a distributed ledger since 2023. The advantages of the “digital” aspect and using a distributed ledger are efficient management of the bond’s lifecycle, as well as allowing the investor to access up-to-date information on the green project’s performance indicators.
A possible scenario for early-stage adoption would be to designate stablecoins as a “cashier order on the blockchain” (链上银行本票), allowing banks to issue them within China’s existing financial framework; they could then be automatically converted into fiat currency upon receipt, integrating them into the existing legal banking system.
“Institutions [must] come first” (制度先行) before experimenting with renminbi stablecoins—whether they are to be used for digital payments in the economy or to potentially reduce exposure to US sanctions via SWIFT; meanwhile, the use of foreign stablecoins in China and the issuance of renminbi stablecoins beyond China’s borders must be clearly regulated.
5. Wang Yongli
Takeaway: Stablecoins are a “Transitional Product” leading to the replacement of fiat currencies by central bank digital currencies (CBDCs)
Name: Wang Yongli (王永利)
Year of birth: April 1964
Position: General Manager, China International Futures Co. (CIFCO); Former Board Director, SWIFT (2012-2014); Former Deputy Governor and Executive Director, Bank of China (2006-2014)
Sources: Wang Yongli’s Public Account (3 June 2025); Wang Yongli’s Public Account (26 July 2025); China Economic Times (28 August 2025); Wang Yongli’s Public Account (13 September 2025)
1. Stablecoins to Be Surpassed by Central Bank Digital Currencies
The GENIUS Act’s regulation of USDC tokens is accelerating the development of a “borderless ‘crypto world’” (无国界“加密世界”) where assets, goods and currencies are exchanged; this calls for an “active response” (积极应对) from other major states, especially China.
Owing to the regulatory challenges of ensuring financial stability and preventing misuse with numerous privately-issued stablecoins, they are likely only to be a “transitional product” (过渡产物) on the pathway towards replacing traditional fiat money with central bank digital currencies (CBDCs) on the blockchain—such as the digital renminbi.
Wang: “[China should] seize the opportunity created by US legislation prohibiting the development and roll-out of a digital dollar to secure first-mover advantage and the commanding heights [抢占先机和制高点] in digital fiat.”
Note: This refers to the current prohibition on developing a CBDC in the US under the Anti-CBDC Surveillance State Act—passed concurrently with the GENIUS Act on 17 July 2025.
The GENIUS Act may actually “backfire” (反噬) by prompting other countries to carry out legislation and action for their own digital currencies.
2. Improving Uptake of the Digital Renminbi
Up until now, China’s CBDC—the digital renminbi (数字人民币), which has been in operation since 2021—has seen limited uptake because its classification is restricted to M0 and retail exchange—i.e. currency in circulation and central bank reserves, rather than savings deposits in peoples’ bank accounts; this is unreasonable and needs to be broadened to all types of money (including M1 and M2) and usage scenarios.
Note: Expanding the digital renminbi’s classification to M1 and M2 may involve allowing people to receive interest on the savings deposits, as with a regular currency. Mu Changchun, the Director-General of the Digital Currency Institute at the People’s Bank of China, suggested on 13 September that allowing the digital renminbi to accumulate interest in private bank accounts will be a necessary step for improving its competitiveness (see above).
In particular, the digital renminbi needs to position itself as a competitive tool in international payments and settlement.
Wang: “If we cannot keep pace with [跟上] US dollar stablecoins in terms of payment efficiency, settlement costs, and the like, then [we will face] substantial constraints [很大束缚] in cross-border renminbi payments and internationalisation.”
3. Two Tracks: First Offshore; Then Onshore
The development of Hong Kong dollar-pegged stablecoins and crypto assets (加密资产)—in which Mainland Chinese companies are eager to participate—will provide a valuable source of experience for launching offshore renminbi stablecoins (离岸人民币稳定币).
This, in turn, could provide the basis for developing domestic renminbi stablecoins (人民币稳定币) and the central bank-issued digital renminbi (数字人民币) to such a point that it surpasses them.
Wang: “Promoting a renminbi stablecoin should not be the fundamental goal [根本目标]; accelerating the renminbi’s internationalisation is the fundamental goal, and speeding up the development of the digital renminbi (e-CNY) is the top priority [重中之重].”
Note: Regarding Hong Kong dollar stablecoins, notable Mainland Chinese investors to date include JD.com, Ant Group, the Beijing-based fintech business North King with a view to developing digital stablecoin wallets, and the Hong Kong subsidiary of Mainland-funded brokerage Guotai Haitong (国泰海通)—which received a licence to trade in virtual assets in June.
4. A Payment Token, Rather Than a “Speculative Vehicle”
To prevent “over-issuance” (超发滥发) or their turning into a “speculative vehicle” (投机工具), stablecoins issuers should not receive interest payments. The use of stablecoins should be strictly limited to that of a payment “token” (代币)—in other words, a “payment stablecoin” (支付型稳定币) without “scope for asset appreciation” (升值空间).
Wang: “Even though dollar stablecoins help strengthen the dollar’s international influence and expand demand for US Treasury bonds, if able to slip out of regulatory oversight [脱离监管], their large-scale development could deal a severe blow to the dollar and the US financial system, becoming a ‘double-edged sword’[双刃剑].”
Note: Perhaps with these issues in mind, Wang suggests that an “international version of the digital renminbi” (数字人民币国际版) should be kept “separate from the domestic version” (与国内版区分), akin to the existing offshore renminbi.
In a world of digital currencies, digital IDs will be necessary. The release in February 2025 of the Measures for the Administration of National Public Services for Online Identity Authentication (《国家网络身份认证公共服务管理办法》) in China—which came into effect on15 July—is an important step in this direction.
6. Zhou Xiaochuan
Takeaway: The use cases for stablecoins have been exaggerated; centralised and non-tokenised payment systems like Alipay and WeChat meet the same need
Name: Zhou Xiaochuan (周小川)
Year of birth: January 1948
Position: Former Governor of People’s Bank of China (2002-2018); Vice Chairman of Chinese People’s Political Consultative Conference (2013-2018)
Sources: China Finance 40 Forum (CF40) (27 August 2025—from 13 July speech at closed-door seminar hosted by CF40)
1. Limited Applications Domestically and Internationally
For domestic payments, China already has payment platform technology such as WeChat Pay and Alipay that is low-cost and highly efficient; as a result, the rationale for switching to stablecoins in China is not as apparent as in the US—whose credit card companies charge fees of around 2%.
Zhou: “Though many believe that stablecoins will reshape our payment systems, our current payment systems—especially in the field of retail payments—have objectively very little room to be undercut in terms of costs.”
The potential of stablecoins in international payment settlement has been somewhat “exaggerated” (夸大其词).
Most of the costs in international payments come from compliance regulations such as Know Your Customer (KYC) and Anti-Money Laundering (AML), which switching to stablecoins would not necessarily avoid; meanwhile, Southeast Asian countries have started employing centralised cross-border payment systems that are real-time but do not rely on tokenisation.
2. High Risks if Treated as Assets
The most obvious use case, therefore, is for asset-exchange markets, particularly for digital or virtual assets. However, these assets are often “vulnerable to price hyping” (容易被炒作推高价格) and entail high risks for investors and market stability.
Under the regulatory frameworks of the US and Hong Kong, there could easily be a risk of “high-leverage amplification” (高杠杆放大) based on a “multiplier effect” (乘数效应) whereby stablecoins that are deposited, exchanged or revalued (M1 and M2) may eventually create a value much higher than the original 1:1 fiat money deposit. These risks must be fully considered.
7. Zhu Guangyao
Takeaway: USDC tokens represent a new iteration of the dollar in the “third phase of the Bretton Woods system”; China needs a vigorous policy response
Name: Zhu Guangyao (朱光耀)
Year of Birth: June 1953
Position: Former Counsellor of the State Council (2018-2024); Vice Minister of Finance (2010-2018)
Sources: Guancha.cn (10 July 2025—from 28 June speech at 2025 China Forum on International Affairs); New Economist (17 June 2025—from 29 June speech at a closed-door session on “The Future of Stablecoins”, hosted by the New Economist Think Tank); China Wealth Management 50 Forum (25 August 2025)
The Third Era of Bretton Woods: Using Decentralisation to Centralise
High interest rates and borrowing costs signal that the “second phase of the Bretton Woods system” (the post-“Nixon Shock” era) has reached its limits; the GENIUS Act is a “strategically significant” (具有战略意义) shift towards the “third phase of the Bretton Woods system”.
The set-up of US dollar stablecoins is “highly centralised” (强中心化). Currently, “it is using decentralisation to centralise” (是“去中心化”服务于“强中心化” ), but there is a possibility that the government may later bring Tether (the issuer of the USDT stablecoin) under its full control (收编).
Zhu: “Carrying out the minting and regulation of a fiat stablecoin [法币稳定币], regardless of whether it is pegged to the dollar or any other currency, is not the triumph of decentralised finance but rather that of national sovereignty.”
China needs a vigorous policy response to address competition from US dollar-backed stablecoins, guided by a strengthened “sense of anxiety and worst-case scenario thinking” (忧患意识与底线思维) about the risks of inaction.
This should involve a two-track approach:
Supporting the stablecoins backed by the Hong Kong dollar—which is indirectly pegged to the dollar.
Considering the introduction and overall planning of renminbi-linked stablecoins as part of the high-level national finance strategy.
8. Fan Wenzhong
Takeaway: Stablecoins will eventually erode US dollar hegemony, lowering the barrier of entry to employing non-SWIFT or dollar-denominated international payment networks
