China’s push for a new digital trade route is now tapping into a fragile Western alliance, turning stablecoins and central bank digital currencies into another front in the global power race.
Chinese Vice Premier He Lifeng used the main stage at the World Economic Forum this week to call for a “cooperative” plan for global trade.
He also pointed out that Beijing is seeking shared digital payment networks at a time when US-EU relations are under new strain from President Donald Trump’s recent tariff warnings.
His comments came days after new data showed an increase in scrutiny of China-backed digital currencies.
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Can BRICS Digital Currencies Reduce Dependence on the US Dollar in Global Trade?
Beijing again it floated a new plan to connect the BRICS central bank’s digital currencies, a move that could ease the bloc’s dependence on the US dollar for trade.
Speaking to political and business leaders in Davos, he said said China wants to support the global trade system, not destroy it. He also warned against collective tariffs and the rise of economic nationalism.
He did not mention the United States by name, but his point was clear. He said the world “must not return to the law of the jungle where the strong prey on the weak,” and added that “tariff wars and trade wars have no winners.”
His remarks echo Beijing’s latest attempt to portray itself as a more stable voice as Washington threatens new tariffs on several European allies.
Controversies surrounding digital finance, supply chain, and technology regulation have also added to the pressure.
China’s latest economic data showing a growth of almost 5% this year. Beijing relies heavily on domestic demand and services to keep employment stable, while defending its large trade surplus as a result of global supply chains rather than a strategic objective.
The timing of the speech was important. It came as India and other BRICS members pushed ahead of the central bank’s plans to link digital currencies, and as new data from a China-led pilot show how fast alternative payment systems are growing.
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Why Does the US Dollar Still Control 97-98% of Fiat-Backed Stablecoin Value?
He did not mention specific tools in his Davos remarks. Instead, he talked about multilateralism and trade rules.
But his comments came at a time when Beijing is deeply involved in several digital currency projects that have already begun to be used in the real world.
New figures this week show that Project mBridge, a cross-border payment network sponsored by the People’s Bank of China and a group of regional banks, has generated more than $55Bn in transactions across more than 4,000 transactions.
Analysts estimate that about 95% of that activity involves the digital yuan.
However, the broader stablecoin market is still clinging to the US dollar for now.
Stablecoin Payments To Reach Nearly $33 Trillion By 2025
The latest data from the International Monetary Fund shows that the digital dollar is sitting deep in the stablecoin market.
The IMF estimates that around 97-98% of all fiat-backed stablecoins are pegged to the US dollar. That share is far greater than the dollar’s weight in world GDP or trade.
The IMF also pointed out last year that many stablecoins track the dollar, although the majority of transactions take place outside the United States.
It’s a sign that digital dollars are continuing to flow from offshore markets and into emerging economies where users want quick and predictable payments.
Some research supports this. TRM Labs and several independent analysts say more than 90% of fiat-backed stablecoins are dollar-denominated.
Tether’s USDT and Circle’s USDC make up most of that supply.
Bloomberg, citing Artemis Analytics, report this month stablecoin payments reached about $33Tn by 2025.
That’s up nearly 72% from the previous year. USDC and USDT alone have done over $30Tn of that activity.
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Key Takeaways
-
China’s push for a new digital trade route is now tapping into a fragile Western alliance, turning stablecoins and central bank digital currencies into another front in the global power race. -
China’s latest economic data showing a growth of almost 5% this year. Beijing relies heavily on domestic demand and services to keep employment stable, while defending its large trade surplus as a result of global supply chains rather than a strategic objective.
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