China’s Digital Yuan Goes Global: The Launch of an International Operations Center
China has announced a major step in its ongoing campaign to internationalize the digital yuan (e-CNY), unveiling plans to establish an international operations center in Shanghai. This move, revealed by Pan Gongsheng, Governor of the People’s Bank of China (PBoC), at the 2025 Lujiazui Forum, signals Beijing’s ambition to expand the global reach of its central bank digital currency (CBDC) and reshape the international financial landscape. The initiative is part of a broader package of financial reforms aimed at boosting innovation, enhancing financial stability, and reducing reliance on dominant foreign currencies—most notably, the US dollar.
Why Is China Pushing the Digital Yuan Internationally?
The digital yuan, also known as e-CNY, is China’s state-backed digital currency. Unlike cryptocurrencies such as Bitcoin, which are decentralized and not controlled by any government, the digital yuan is issued and regulated by the PBoC. Since its pilot launch in 2019, the e-CNY has been tested in numerous Chinese cities and regions, with the goal of modernizing payments, increasing financial inclusion, and providing the government with greater oversight of monetary flows.
However, the latest push is not just about domestic modernization. China’s leadership sees the digital yuan as a tool to:
- Enhance the global influence of the renminbi (RMB)
- Reduce dependence on the US dollar in international trade and finance
- Address vulnerabilities in traditional cross-border payment systems
- Promote Shanghai as a global financial hub
Pan Gongsheng emphasized the urgency of these goals, citing growing geopolitical tensions, especially with the United States, and the need for a more diversified and resilient global monetary system. He argued that traditional cross-border payment infrastructures are increasingly “politicized and weaponized,” making them vulnerable to unilateral sanctions and disruptions.
What Will the International Operations Center Do?
The new international operations center in Shanghai is designed to serve as a hub for the digital yuan’s global business. Its main objectives include:
- Facilitating cross-border payments and settlements using the digital yuan
- Supporting Chinese companies operating overseas, especially those involved in the Belt and Road Initiative
- Developing new financial market services and products based on digital currency technology
- Promoting innovation in digital finance, including blockchain-based trade finance and real-time settlement systems
Pan’s announcement was part of a package of eight new financial policies, which also include the creation of a personal credit reporting agency, the launch of a pilot program for offshore trade finance reform, and the establishment of a transaction reporting repository for the interbank market. These measures are intended to make China’s financial system more open, efficient, and attractive to both domestic and international players.
Context: The Global Race for Digital Currencies
China’s move comes amid a global race among central banks to develop and deploy digital currencies. While cryptocurrencies like Bitcoin and Ethereum have captured public attention, central bank digital currencies (CBDCs) are being designed as official, government-backed alternatives. The digital yuan is widely regarded as one of the most advanced CBDC projects in the world, with China having started research as early as 2014.
Other major economies are also exploring digital currencies:
- The European Union is working on a digital euro
- The United States is studying a digital dollar, though progress has been slow
- The United Arab Emirates, Israel, and Hong Kong are piloting their own CBDCs or stablecoins
Stablecoins—digital assets pegged to traditional currencies like the US dollar—have also emerged as popular tools for cross-border payments. However, these are typically issued by private companies and are not considered legal tender. China’s approach, by contrast, is to maintain strict government control over its digital currency, both to ensure stability and to prevent the kind of regulatory challenges seen in the crypto sector.
Reducing Dollar Dependence: A Multipolar Currency System
One of the most significant motivations behind China’s digital yuan push is the desire to reduce global dependence on the US dollar. The dollar currently dominates international trade, finance, and reserves, giving the United States significant influence over the global economy. Recent years have seen this dominance challenged by geopolitical tensions, trade wars, and the use of financial sanctions as a tool of foreign policy.
Pan Gongsheng and other Chinese officials have called for the development of a “multipolar” international monetary system, where several major currencies—including the yuan, euro, and others—coexist and compete. This, they argue, would make the global financial system more resilient and less susceptible to unilateral actions by any single country.
At the Lujiazui Forum, Pan stated:
“Developing a multipolar international monetary system will help strengthen policy constraints on sovereign currency countries, enhance the resilience of the system, and better safeguard global financial stability.”
He also criticized the governance structures of major international financial institutions like the International Monetary Fund (IMF) and the World Bank, arguing that they have not kept pace with the rise of emerging markets and developing countries.
Technological Innovation and Regulatory Challenges
The international operations center is not just about expanding the digital yuan’s reach; it is also a platform for technological innovation. Pan highlighted the role of emerging technologies such as blockchain and distributed ledger technology (DLT) in transforming cross-border payments. These technologies enable real-time settlement, reduce transaction costs, and shorten the payment chain, making international trade more efficient.
However, the rapid evolution of digital finance also brings regulatory challenges. Pan acknowledged that regulatory oversight remains insufficient in several areas, particularly in the fast-growing crypto asset market and in climate risk-related financial frameworks. He called for greater global coordination to ensure that innovation does not outpace regulation, warning that regulatory approaches are often “overly driven by politics” and can swing drastically.
China’s own approach to digital assets remains cautious. While the government has embraced blockchain technology and is aggressively promoting the digital yuan, it continues to ban cryptocurrency trading and mining on the mainland. This reflects a desire to harness the benefits of digital innovation while maintaining strict control over the financial system.
Shanghai’s Role as a Global Financial Hub
The choice of Shanghai as the location for the international operations center is significant. Shanghai is already China’s leading financial center and is being positioned as a global hub for digital finance. The city will pilot a range of new financial tools, including:
- Blockchain-based trade finance solutions
- Innovation bonds and risk-sharing mechanisms for tech companies
- Expanded green finance programs, including support for carbon reduction and transition finance
These initiatives are designed to attract international investors, support high-quality Chinese enterprises, and facilitate cross-border trade and investment. The city’s free trade zones will also see the development of offshore bonds and the optimization of free trade accounts, making it easier for companies to access global capital markets.
Implications for Global Trade and Finance
The establishment of the international operations center for the digital yuan has far-reaching implications for global trade and finance. If successful, it could:
- Increase the use of the yuan in international transactions, especially among China’s trading partners and Belt and Road Initiative countries
- Provide an alternative to dollar-based payment systems, reducing exposure to US sanctions and financial disruptions
- Accelerate the adoption of digital currencies and blockchain technology in global finance
- Encourage other countries to develop their own CBDCs and explore cross-border interoperability
However, challenges remain. The yuan’s share of global payments and reserves is still small compared to the dollar and euro. Many countries remain cautious about adopting a currency that is tightly controlled by the Chinese government, especially given concerns about data privacy and financial transparency. Moreover, the success of the digital yuan will depend on its ability to offer real advantages over existing payment systems in terms of speed, cost, and security.
Expert Perspectives and International Reactions
Financial experts and industry observers have noted both the ambition and the challenges of China’s digital yuan strategy. The move has been welcomed by some as a necessary step toward a more balanced and resilient global financial system, while others caution that widespread adoption will take time and require significant trust-building.
Li Yunze, director of the National Financial Regulatory Administration, highlighted the importance of foreign institutions in China’s financial system, stating:
“Foreign institutions are important bridges and links for attracting investment, talent, and are important participants and active contributors to the construction of China’s modern financial system.”
At the same time, China’s efforts to open its financial markets and create a transparent, stable, and predictable environment for foreign players are seen as crucial for attracting international participation in the digital yuan ecosystem.
In Summary
- China is establishing an international operations center for the digital yuan in Shanghai to boost the currency’s global reach and influence.
- The move is part of a broader strategy to reduce reliance on the US dollar and promote a multipolar international monetary system.
- The center will facilitate cross-border payments, support Chinese companies abroad, and drive innovation in digital finance.
- Shanghai will pilot new financial tools and services, positioning itself as a global hub for digital finance.
- Technological innovation and regulatory challenges remain, with China seeking to balance innovation with control and oversight.
- The success of the digital yuan’s internationalization will depend on its ability to offer real benefits and build trust among global users.
