China promotes a "multipolar" RMB system to compete with the United States for global financial leadership!

In 2025, a new competition emerged between China and the United States in the field of digital currency infrastructure. This competition is not only a contest of technological strength but also a struggle for global financial leadership. In May of this year, Hong Kong passed landmark legislation to regulate stablecoins pegged to fiat currencies, highlighting its ambition to become a digital financial center and aligning with Beijing's broader strategy to promote the digital yuan (e-CNY) as an alternative to the dollar. At the same time, U.S. policymakers and fintech companies are intensifying efforts to expand the coverage of dollar-backed stablecoins, reflecting an increasingly fierce competition over who will set the rules for the emerging digital currency order.

1. China Promotes a Multipolar Currency System: Digital Renminbi and BRICS Countries

China has been actively promoting the development of the digital renminbi. The People's Bank of China (PBOC, the central bank of China) announced plans to establish an international operating center for the digital renminbi in Shanghai. This move aims to enhance the global influence of the digital renminbi and reduce reliance on the US dollar in international trade. The goal of the People's Bank of China is to integrate the digital renminbi into supply chain financing and cross-border payment sectors, especially between mainland China and Hong Kong, with cross-border payment volumes expected to reach 8 billion USD by 2025.

However, analysts at JPMorgan insist that the digital renminbi is unlikely to undermine the dollar's dominance in global transactions, and the data clearly illustrates this. In 2022, the dollar accounted for 88% of global foreign exchange trading, 70% of foreign currency debt issuance, and 48% of cross-border liabilities, while the renminbi only accounted for 7% of foreign exchange trading volume.

However, the role of the digital renminbi in facilitating internal trade among BRICS countries and other emerging markets may gradually weaken the influence of the US dollar in certain regions. At the 2025 Rio de Janeiro BRICS summit, leaders from various countries reaffirmed their commitment to de-dollarization, called for the establishment of alternative payment systems, and criticized US dollar-based unilateral trade measures. BRICS countries condemned unilateral tariffs, believing they undermine global economic stability.

The BRICS countries are actively exploring alternative payment systems, a strategy reflected in several specific mechanisms. The New Development Bank has issued over 2.1 billion dollars in local currency loans to finance infrastructure and sustainable projects, reducing reliance on dollar funding; while the 100 billion dollar emergency reserve arrangement provides liquidity support in currencies other than the dollar for member countries, enhancing financial resilience.

Complementing this transformation is the significant expansion of China's Cross-border Interbank Payment System (CIPS), which has facilitated trade settlements denominated in RMB and achieved interconnectivity with Russia's SPFS system, allowing certain countries to bypass the USD-based SWIFT network. Trade data further corroborates this trend: in 2024, the bilateral trade volume between China and Russia reached 218 billion USD, with the share settled in RMB and rubles continuously growing; while India's total trade with Russia reached 66 billion USD, a significant portion of which bypassed the USD through local currency arrangements.

2. US stablecoins: Clear regulation and global influence

In response to the growing importance of digital currencies, the U.S. Senate passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) on June 17 with a vote of 68 in favor and 30 against, marking the first federal legal framework for stablecoins in the payments sector. This landmark legislation stipulates that issuers must fully back stablecoins with liquid assets, register with regulators, and meet transparency and audit requirements. The passage of the bill is widely seen as a way to solidify the U.S. dollar's dominance in the digital payments arena by ensuring a regulated channel for stablecoins pegged to the dollar.

At the same time, Circle, which issues the USDC stablecoin pegged to the US dollar, is expanding globally. According to its "2025 USDC Economic Conditions Report," the circulation of USDC has increased by 78% year-on-year, and by early 2025, its active supply will exceed 60 billion dollars, while its total transaction volume will surpass 20 trillion dollars, with a monthly transaction volume of 1 trillion dollars reached in November 2024. Currently, over 500 million users can access USDC across more than 180 countries/regions, benefiting from an increasingly robust global banking partner network and cross-chain transfer protocols that have facilitated over 20 billion dollars in cross-blockchain transfers.

It is worth noting that, according to foreign media reports, Ant International, a subsidiary of Ant Group supported by Jack Ma, is preparing to integrate USDC into its Ant Chain platform after it complies with the regulatory standards of the US General Data Protection Regulation (GENIUS Act). This integration will connect USDC with Alipay's massive user base of over 1 billion and unlock new cross-border transaction capabilities for regulated digital dollars.

This rapid growth—coupled with the clarity of regulation following the introduction of the GENIUS Act—makes USDC a powerful tool for consolidating the digital hegemony of the dollar across nations and industries. The increasing popularity of USDC among institutions and its interoperability with platforms like Alipay and AntChain marks the integration of American stablecoin infrastructure with China's fintech influence, reinforcing the dollar's competitive advantage in the emerging digital economy.

III. Impact on Global Finance: Fragmentation of Currency Landscape

The escalating digital currency competition between China and the United States highlights the strategic rivalry between the two countries in vying for influence over the future of global finance. China is promoting the digital yuan to establish a multipolar currency system, while the United States is utilizing stablecoins to reinforce the dominance of the US dollar in digital transactions.

This intensified competition has fragmented the global currency landscape, with multiple digital currencies coexisting, each supported by different geopolitical groups. This decentralization may increase transaction costs and complicate international trade; however, it also reflects the evolution of the global economic power structure.

Recent data highlights this shift in pattern. According to data from the International Monetary Fund (IMF) and the Currency Composition of Official Foreign Exchange Reserves (COFER), the share of the US dollar in global foreign exchange reserves has dropped from over 70% in the early 21st century to about 59% by the end of 2021, as countries (especially BRICS nations) implement strategies for reserve diversification. For instance, in just the first quarter of 2025, central banks in emerging markets purchased over 244 metric tons of gold, setting a record for the highest quarterly total in recent years. This indicates that countries are working together to mitigate their reliance on the US dollar and enhance their ability to withstand geopolitical and monetary shocks.

These reserve transfers indicate that deeper structural changes are occurring in the global financial system. Institutions such as the International Monetary Fund have warned that the payment efficiency gains brought by digital currencies may be "offset by challenges to the financial safety net under pressure," especially in a world where the digital currency system is fragmented.

Kenneth Rogoff, a Harvard University professor and former chief economist of the International Monetary Fund, agrees with this, stating that today marks the most important turning point in the global monetary system since the end of the gold standard. He emphasizes that although the US dollar may lose market share—mainly to the Chinese yuan, followed by the euro—cryptocurrencies have already been eroding the dollar's dominance in the underground economy. This shift has been ongoing for over a decade, fueled by the increased flexibility of the yuan and the development of alternative settlement systems in China. The policies of the Trump administration have accelerated the evolution of these trends.

Conclusion:

The digital currency competition between China and the United States is not just a technological arms race; it represents a reordering of global monetary governance. As competing infrastructures gradually form geopolitical blocs, the future of multinational finance may depend not only on efficiency or innovation but also on which networks the world's economies choose to trust. In this emerging era, political factors such as interoperability, accessibility, and sovereignty will define the landscape of global finance more than ever before.