China Advances Yuan-Backed Stablecoins, Challenging US Dollar Dominance

China is actively challenging the US dollar's global dominance through the development of a Yuan-backed system anchored in renewable energy projects and digital currency initiatives, such as stablecoins, which facilitate international trade and bypass dollar-based transactions. Major infrastructure projects like the Yarlong Tampoo mega dam and cross-border transmission lines enable direct renminbi settlements, reinforcing China's strategic push for de-dollarization. Meanwhile, the US is responding with regulatory frameworks like the GENIUS Act, which mandates full reserve backing for stablecoins to preserve monetary discipline while fostering market expansion, highlighting the inherent 'stablecoin paradox' where credibility conflicts with commercial incentives. Both the US and China are engaged in a digital currency rivalry that shapes the future of global payments, monetary sovereignty, and economic power, complicated by fragmented regulations and geopolitical tensions. Additionally, emerging decentralized payment networks aim to connect various national systems to facilitate local currency settlements and reduce reliance on traditional systems like SWIFT, potentially reshaping regional power dynamics. Together, these developments signal a historic shift in international finance with significant implications for financial stability, capital formation, and global economic governance.