China quietly reveals two powerful weapons, targeting the hegemony of the US dollar.

"Humanity is undergoing a new currency revolution, and China needs to participate; it cannot fall behind." Against the backdrop of increasingly fierce global competition in digital currencies, China is quietly deploying two powerful tools - the digital renminbi and the renminbi stablecoin - to counter the dominance of the US dollar in the international financial system. This strategy is not only about financial technology innovation and the internationalization of the renminbi but also involves the struggle for national financial security and global financial discourse power.

Two Weapons: The Differences and Complementarity Between Digital Renminbi and Renminbi Stablecoin

The Bund Conference that just concluded last week can be described as a "thought nuclear explosion" regarding the future of digital assets. For the average person, the content of the conference may be obscure and difficult to understand, but two technical terms will bring significant changes to our lives.

Digital Renminbi: National-level foundation, stability and governance

The digital renminbi is directly issued by the People's Bank of China and has gradually penetrated into daily scenarios such as metro and bus systems, retail in supermarkets, and government subsidy distributions since the pilot program was launched in 2019. Renowned digital economy scholar Liu Xingliang pointed out that the digital renminbi has the following characteristics:

· Digital form of cash M0 led by the central bank with dual-layer issuance.

· Has legal tender status, controllable anonymity, and programmable features

· The policy tool attributes are strong, and the system's robustness is the highest.

· Has more advantages in retail payments and precision distribution such as micro high-frequency, people's livelihood subsidies, and government payment.

Renminbi stablecoin: market-oriented front, alive and fast

At the same time, the new concept of "Renminbi stablecoin" is being widely discussed in the industry. The so-called "fiat stablecoin" refers to a cryptocurrency that is pegged to a certain fiat currency and maintains value stability. For example, the issuer of USDT (Tether) promises a "1:1 peg to the US dollar", meaning that for every stablecoin issued, there is 1 US dollar in the issuer's bank account as collateral.

Lawyer Liao Wang from the Zhejiang Kenting Law Firm explained: "The RMB stablecoin should be an offshore RMB stablecoin, a 'RMB' on the blockchain, which will be driven by market institutions to serve scenarios such as cross-border remittances for small and medium-sized enterprises, settlement on e-commerce platforms, and on-chain trade financing."

The characteristics of the Renminbi stablecoin include:

· Issued by licensed institutions, requiring 1:1 high-quality reserves

· Penetrating regulatory and custody arrangements, closer to commercial innovation and the Web3 ecosystem.

· The "native on-chain" ecosystem is relatively flexible in on-chain scenarios, 24×7 cross-platform clearing and settlement, DeFi/blockchain games/tokenization of assets, etc.

Why does China need a dual approach? Strategic significance of digital currency

Global digital currency competition intensifies

In April, the U.S. House of Representatives passed the STABLE Act, aiming to establish a federal regulatory framework for payment stablecoins; in May, the U.S. Senate passed a key procedural vote on the "Guidance and Establishment of the U.S. Stablecoin National Innovation Act"; the UK also released regulatory proposals regarding stablecoin issuance, crypto asset custody, and the financial soundness of crypto asset companies.

Liao Wang pointed out: "The essence of blockchain is a distributed ledger, which is completely different from traditional double-entry ledgers. The U.S. Securities and Exchange Commission has clearly stated that in the future, the capital markets will be migrated to the distributed ledger of blockchain, and currently, dollar assets on the chain account for 90%. This means that we must have a place in this new ledger system."

Strategic significance is profound

Liu Xingliang emphasized that the development of the digital renminbi and the renminbi stablecoin has multiple strategic significances for China:

1. Payment - Clearing - Pricing integration capability enhancement: The synergy between e-CNY and CIPS/mBridge improves the efficiency of cross-border direct connections and sovereign clearing capabilities.

2. Participate in and shape international standards: Enhance rule-making discourse power through collaboration with peers such as the BIS project and HKMA.

3. Capital Markets and Digital Asset Ecosystem: Providing T+0 or near real-time settlement basis for RWA, cross-border ETF redemption, digital bonds, etc.

4. The "optional path" for the internationalization of the Renminbi: providing a combination of traditional channels and new channels, enhancing usability and network spillover.

Hong Kong Takes the Lead: Testing Ground for Offshore Renminbi Stablecoins

Hong Kong, which has long served as a "financial bridgehead", is accelerating the exploration of "fiat stablecoins". In August, Hong Kong's "Stablecoin Regulation" officially came into effect, clearly requiring that entities issuing fiat stablecoins or stablecoins pegged to the value of the Hong Kong dollar must apply for a license.

Zhiben Society President Xue Qinghe believes: "In the future, it is more likely that an offshore RMB stablecoin will be launched in Hong Kong, and it is unlikely to be launched domestically. The operating mechanism of the offshore RMB stablecoin may be similar to the current Hong Kong dollar stablecoin regulations."

Liu Xingliang also expressed optimism about the development of the "dual-track system":

· Track 1: The digital yuan continues to expand its retail applications and connects with wholesale CBDC platforms in officially led multinational pilot programs.

· Track Two: The renminbi stablecoin will first test the waters in Hong Kong and cross-border blockchain businesses, gradually expanding around RWA, on-chain trade financing, and the digital asset ecosystem of the Hong Kong Stock Exchange.

As global competition in digital currencies intensifies, China's "dual approach" strategy will open new pathways for the internationalization of the Renminbi. The digital Renminbi focuses on domestic retail payments and official cross-border settlement channels, while the Renminbi stablecoin targets offshore markets and the blockchain ecosystem. The two complement each other and work in tandem to address the dominance of the US dollar in the international financial system, striving for greater discourse power for China in the new landscape of global digital finance.