Dingding Chen
In 2025, China and the United States are deepening their rivalry in a new arena: digital currency infrastructure.
In May, Hong Kong passed landmark legislation to regulate fiat-referenced stablecoins, underscoring its ambition to become a digital finance hub and align with Beijing’s broader strategy to promote the digital yuan (e-CNY) as an alternative to the U.S. dollar.
Meanwhile, U.S. policymakers and fintech firms are ramping up efforts to expand the reach of dollar-backed stablecoins, reflecting a growing competition over who sets the rules of the emerging digital monetary order.
China has been actively promoting the e-CNY, with the People’s Bank of China (PBOC) announcing plans to establish an international operation center for the digital yuan in Shanghai.
This initiative aims to enhance the global presence of the e-CNY and reduce reliance on the U.S. dollar in international trade. The PBOC aims to integrate the e-CNY into supply chain financing and cross-border payments – particularly between mainland China and Hong Kong – where projected usage is expected to reach $8 billion in 2025.
Yet, analysts at J.P. Morgan maintain that the e-CNY is unlikely to erode the U.S. dollar’s dominance in global transactions, and the data tells a clear story. In 2022, the U.S. dollar accounted for 88 percent of global FX transactions, 70 percent of foreign currency debt issuance, and 48 percent of cross-border liabilities, while the Chinese yuan made up just 7 percent of FX turnover.
However, the e-CNY’s role in facilitating trade within the BRICS bloc and other emerging markets could gradually erode the dollar’s influence in specific regions. At the 2025 BRICS summit in Rio de Janeiro,
leaders reaffirmed their commitment to de-dollarization, calling for alternative payment systems and criticizing unilateral dollar-based trade measures. The bloc has condemned unilateral tariffs, viewing them as harmful to global economic stability.
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