2025-11-20 Major Impacts on China from Bitcoin and Stablecoins

What might happen to China if Bitcoin and U.S. dollar–pegged stablecoins become widely used?

Capital Outflow / Loss of Monetary Control

• Widespread use of dollar-backed stablecoins could undermine China’s capital controls. According to some analysts, dollar stablecoins might be used to move money out of China more easily.
• This could reduce the effectiveness of China’s monetary policy: if more transactions happen in foreign-backed tokens, the People’s Bank of China (PBOC) may have less control over money supply and capital flows.
• More broadly, it could weaken China’s monetary sovereignty because these stablecoins are tied to the dollar, not the yuan.

Dollar Dominance Reinforced

• If US-dollar stablecoins become a dominant means for trade and settlement, this reinforces the global power of the U.S. dollar — a development that worries Chinese economists.
• That could make it harder for China to push the renminbi (RMB) into a more dominant role in global trade or reserves.
• Chinese researchers see a risk that such stablecoins will lead to higher demand for U.S. Treasuries, giving the U.S. more leverage.

Opportunities

Using stablecoins could lower payment costs, improve trade settlement, and help China internationalize the yuan (especially via RMB-pegged stablecoins).

Risks

Widespread US-dollar stablecoin use could undermine China’s monetary sovereignty, increase capital flight risk, reinforce the dollar’s dominance, and reduce the effectiveness of China’s financial controls.