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China economy
OpinionChina Opinion
Matteo Giovannini
Matteo Giovannini

Opinion | Talk of digital yuan challenging dollar dominance misses real power shift

China is merely building parallel capabilities. Whether the systems remain complementary or become competitive depends on how others respond

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People walk past an e-CNY sign at the 2021 China International Fair for Trade in Services, in Beijing on September 5, 2021. Photo: Xinhua
Matteo Giovannini
As China prepares its digital yuan for wider domestic and cross-border use, the global debate has turned again to a familiar question: is Beijing trying to challenge the US dollar’s dominance? But this misses the more consequential point. The significance of China’s digital currency push lies not in substitution, but in the transformation of the infrastructure that underpins international payments.

Over the past few years, the e-CNY has evolved into one of the world’s most advanced central bank digital currency (CBDC) experiments – and its largest live CBDC project. It had processed more than 3.4 billion transactions worth about US$2.3 trillion by the end of 2025, an increase of over 800 per cent since 2023, according to the Washington-based Atlantic Council.

This rapid expansion highlights the digital yuan’s growing, scalable use across provinces and the widening range of payment scenarios.

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China has also stepped up its involvement in Project mBridge. This CBDC platform has processed over 4,000 cross-border transactions worth nearly US$55.5 billion, a roughly 2,500-fold increase since early 2022, with the digital yuan accounting for about 95 per cent of the settlement volume, according to the Atlantic Council.

All these developments point to a strategic focus that is often misunderstood. China is not attempting a frontal assault on the dollar’s role as the world’s primary reserve currency. Instead, it is working to modernise and partially reconfigure the “plumbing” of the global financial system.

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International payments today remain slow, costly and opaque. Cross-border transfers often pass through multiple correspondent banks, each adding fees, delays and compliance checks. This architecture reflects a system built for a different era. Digital currencies, by contrast, promise near-instant settlement, improved transparency and programmable features that can automate compliance and reduce operational risk.
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