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The Independent
an hour ago
- The Independent
China is expanding into digital currencies, hoping to promote use of its 'people's money'
China has been expanding use of digital currencies as it promotes wider use of its yuan, or renminbi, to reflect its status as the world's second-largest economy and challenge the overwhelming sway of the U.S. dollar in international trade and finance. However, restrictions on access to Chinese financial markets and limits on convertibility of the yuan, or 'people's money,' are big obstacles blocking its global use. Still, Hong Kong already has stablecoin regulations and some Chinese experts are pushing for regulations to prepare for a possible stablecoin pegged to the yuan. Officials in Beijing did not immediately respond to requests for comment on a Reuters report that the State Council, or Cabinet, is preparing to issue a plan for internationalizing the yuan that might include a yuan stablecoin. In the U.S., President Donald Trump has made cryptofriendly policies a priority for his administration. He signed a law, the GENIUS Act, last month regulating stablecoins. How stablecoins work Stablecoins are digital currencies whose value is linked to a specific currency such as the U.S. dollar. They can be used as a substitute in situations where currency transactions might be difficult or costly. They are different from cryptocurrencies like Bitcoin in that their only purpose is to be a means of payment, not an investment meant to be traded to gain value. Dollar stablecoins are typically bought and sold for $1 each. They are based on a reserve equal to their value, but are issued by private institutions, not central banks like the U.S. Federal Reserve. Stablecoins are not Digital Central Bank Currencies, which are digital versions of currencies issued by central banks. They are based on blockchain-based distributed ledgers. They are 'stable' in the sense that their value is anchored to the currency they are based on. Critics of stablecoins say that since they are essentially a proxy for ordinary currencies that can bypass banking systems and safeguards set up to manage traditional financial transactions they may be most useful for illegal purposes. China inches toward using digital currencies China launched its own digital yuan, the e-CNY issued by its central bank, on a trial basis in 2019, and McDonalds was an early participant in that project. Chinese regulators have banned mining, trading and other dealings in private, decentralized digital currencies like Bitcoin, while encouraging use of the digital yuan. The nearly universal use of electronic payments has facilitated use of the e-CNY in the Chinese mainland, with some cities using it to pay wages of civil servants. China has also been promoting use of e-CNY in Africa, as it expands business dealings on the continent. But e-CNY are not stablecoins, and experts say regulations are needed to safely manage their use and to ensure stablecoins could be used smoothly with bank accounts and payment systems. Hong Kong's role in digital currencies Hong Kong, a former British colony that has its own financial markets, currency and partly autonomous legal system, enacted a stablecoin law that took effect on Aug. 1. Aimed at attracting wealthy investors who want to use digital currencies and other financial products, it requires that a stablecoin linked to the Hong Kong dollar must be equal to the Hong Kong dollar reserves for that digital currency. As a global duty-free port and financial hub, Hong Kong has often served as a base for trying out paths toward liberalizing Chinese financial markets. But new regulations specifically governing yuan stablecoin would be needed if such a digital currency were issued for use in Hong Kong, Liu Xiaochun, deputy director of the Shanghai Institute of New Finance, recently wrote in a report on the Chinese financial website China's limits on cross-border dealings China's currency is not freely convertible in world financial markets and its stringent controls on foreign exchange are the biggest hindrance toward making the yuan a global currency, experts say. According to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, as of June, the yuan was the sixth most active currency for global payments by value, with a share of 2.88%. Its use peaked in July 2024 at about 4.7%. It's used more often in trade financing, where it accounts for nearly 6% of such dealings, according to that report. The lion's share of yuan transactions take place in Hong Kong. The U.S. dollar's share as a global payment currency was over 47% as of June, followed by the euro, the British pound, the Canadian dollar and the Japanese yen, the report said. ___ AP Researcher Shihuan Chen contributed from Beijing.
The Independent
an hour ago
- The Independent
Grand ceremony and parade mark 60 years of Chinese Communist Party rule in Tibet
With leader Xi Jinping looking on, China marked 60 years of Communist Party rule in Tibet on Thursday with speeches and a parade in front of the 17th-century Potala Palace, the home of the Dalai Lama until he fled to India in 1959. Speakers hailed economic development in the remote region in the foothills of the Himalayas and stressed the need to fight separatism. Opposition to Chinese rule has been largely quashed by a decades-long campaign of repression that has imprisoned Buddhist monks and demolished some monasteries. 'Tibetan affairs are China's internal affairs, and no external forces are permitted to interfere. All schemes to split the motherland and undermine stability in Tibet are doomed to fail,' senior Communist Party leader Wang Huning told a crowd of 20,000 flag-waving people in a large public square. Communist forces occupied Tibet in 1951, two years after emerging victorious in a civil war and taking control of China. The anniversary marked the government's establishment of the Tibet autonomous region in 1965. It is called Xizang in Chinese. The parade, along a wide avenue between the square and a covered stage for special guests, included floats highlighting the regions of Tibet and large dance troupes that stopped in front of the square to perform. Troops and police marched in formation, shouting out their mottos and holding wide banners that proclaimed Communist Party slogans. 'The great achievements of the Tibet autonomous region over the past 60 years fully demonstrate that only under the leadership of the Communist Party of China ... can Tibet achieve prosperity and progress, create a bright future, and enable people of all ethnic groups in Tibet to live a happy and healthy new life,' Wang told the gathering. The 13-story Potala Palace, now a tourist site, provided an impressive backdrop from its perch atop a rocky outcropping in Lhasa, the capital of Tibet. The Dalai Lama, who recently turned 90, still lives in India and is the spiritual leader of Tibet. China considers him a threat and says it has the right to appoint his reincarnation after his death. Many overseas Tibetans are critical of Chinese rule and a government-in-exile has been set up in the mountainous Indian town of Dharamshala.
Reuters
an hour ago
- Reuters
Yuan short bets hit May highs as China's economic woes weigh on emerging market currencies
Aug 21 (Reuters) - Bearish bets on China's yuan hit their highest since mid-May, with analysts turning short for the first time amid mounting concerns over the economy, a Reuters poll showed on Thursday. China's economy lost steam in July, with retail sales rising just 3.7% year-on-year, well below the 5.9% growth expected in a Reuters poll. Industrial output grew 5.7%, its weakest pace since November 2024. New home prices fell 2.8% in July from a year earlier, extending a two-year stagnation, while fixed-asset investment rose just 1.6% in the first seven months of 2025, missing forecasts for 2.7%. Meanwhile, analysts held on to their bearish outlook for the South Korean won , unchanged since early May, while slightly trimming short positions on the Singapore dollar , a Reuters fortnightly poll of 11 respondents showed. Sentiment toward the Indonesian rupiah turned negative after flipping bullish, while short positions on the Taiwan dollar were trimmed. Bank Indonesia unexpectedly cut its benchmark 7-day reverse repurchase rate by 25 basis points on Wednesday. The poll responses were received before the rate decision. For the Indian rupee and Malaysian ringgit analysts pared back bullish positions. Philippine peso bearish bets were trimmed slightly, and Thai baht analysts trimmed bullish positions. ANZ analysts see India's growth momentum slowing with tepid household consumption and investment expected over the coming quarters, adding that export competitiveness faces headwinds from US tariffs. "Based on this outlook, we believe that the INR is likely to trade with a depreciation bias in the near-to-medium term, underperforming compared to its Asian peers." Meanwhile, Reuters reported China is considering allowing yuan-backed stablecoins for the first time to boost wider adoption globally. China is expected to discuss expanding yuan use and possibly stablecoins for cross-border trade at the Shanghai Cooperation Organisation Summit to be held Aug. 31-Sep. 1 in Tianjin. "Given potential Federal Reserve reluctance to deliver significant rate cuts at upcoming FOMC meetings (contingent on employment and inflation data), market repricing of rate cut expectations could drive the U.S. Dollar and Treasury yields higher, creating headwinds for emerging market currencies," said Poon Panichpibool, market strategist at Krung Thai Bank. Money markets reflect a 93% chance of a 25-basis-point Fed rate cut in September. The U.S dollar index has lost 0.8% in value in the last two weeks, but is on track to edge higher this week, up 0.4% so far. "We have had quite a strong sell-off in the USD for much of 1H 2025 and currencies now await macro cues from data. With both of Fed's inflation and employment mandate in a potential conflict, we could be in a period of consolidation," said Fiona Lim, senior forex strategist at Maybank Singapore. "Currencies such as KRW and TWD which gained the most in 1H of 2025 have the biggest room to retrace." Investors fretted about Federal Reserve independence after another attack from President Donald Trump ahead of remarks from Chair Jerome Powell at the annual Jackson Hole symposium later this week. The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs). The survey findings are provided below (positions in U.S. dollar versus each currency):
