China’s sentiment and approach towards digital currencies have been almost as volatile as the prices of some cryptos. Nothing demonstrates the industry’s strategic importance better than the most populated and second-largest economy taking a 180-degree turn from a complete crypto mining and trading ban in 2021 to the launch of the first yuan-backed stablecoin (AxCNH) by September 2025, alongside an operational centre for the digital yuan (e-CNY) in Shanghai.
The developments mark China’s latest response to the US-initiated trade tensions, as well as the overwhelming USD dominance in the digital currencies space.
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The People’s Bank of China’s regulated digital currency (e-CNY) piloted in major cities during 2020, and since then digital currency holders in China have become the third-most active users for payment purposes, according to GlobalData’s 2025 Financial Services Consumer Survey. Following the domestic rollout, the focus of China’s central bank digital currency (CBDC) and stablecoin initiatives has shifted to the international payments scene amid intensifying competition.
Global South nations, and more specifically the BRICS+, have previously set out to challenge the USD dominance in global trade and finance, but the idea of a new BRICS currency was already far-fetched at the time. China has now taken up the quest by relying on its solid network of nations that are part of its Belt and Road Initiative (BRI). The new AxCNH stablecoin was announced during the 10th BRI summit, as the main use case is for the settlement of cross-border transactions linked to BRI projects and loans across all participating nations, providing a significant platform for spreading the yuan globally.
Similar cross-border payment motivations drove the opening of Shanghai’s new e-CNY operating centre too. So far, a key barrier to the widespread adoption of non-US currencies and payment rails for major international payment flows has been the inferior technological capabilities compared to US rails. However, advancements in digital currency and blockchain technologies can now level this playing field, which can majorly shift the international balance of power in payments in the medium and long run.
China’s shift in its approach and attitude is a significant signal of blockchain’s, crypto’s, and stablecoins’ strategic importance reaching far beyond payment superiority. Despite China’s long-standing concerns over capital flight from the country, it now seems clear that the demand for the national currency and treasuries created by stablecoin- and CBDC-backing requirements outweighs these concerns. With US stablecoin issuers buying up US debt in large scale, bond yields and therefore the cost of servicing national debt decreased. Given the ambiguous state of Chinese trade balances currently, these new endeavour in digital currencies will help in maintaining demand for the renminbi.
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By GlobalDataBlandina Szalay is an Analyst in Banking & Payments, GlobalData
