Introduction: The Battle for the Throne of Digital Currency
400 years ago, Spanish silver conquered global trade, establishing currency hegemony and dominating the world! Today, stablecoins, this form of 'digital cash,' have skyrocketed to a market value of $200 billion, changing global transactions. Dollar stablecoins take the lead, capturing 80% of the market! China is not willing to back down, bringing Renminbi stablecoins and HKD stablecoins to challenge the dollar's digital throne! As a novice investor in Hong Kong or Taiwan, are you curious about how China's strategies will disrupt the market? How will this digital currency war change the future? Follow us as we unveil this ultimate chess game from history to the future!
This article is for informational reference only and is not investment advice.
Dollar stablecoin challenges: Why do we need Renminbi and HKD stablecoins?
Dollar stablecoins (such as USDT and USDC) dominate 80% of market transactions but pose three major problems for China and Hong Kong:
Trade controlled by the United States: Companies using dollar stablecoins may be restricted by American rules (such as OFAC sanctions). Once accounts are frozen for political reasons, transactions come to a halt. It's like using someone else's bank card; it could be locked at any moment.
Exchange troubles and costs: Hong Kong companies receiving USDT must first convert to dollars and then to HKD, with fees as high as 0.7-1%, and wait 2-3 days. For example, a Hong Kong e-commerce business receiving USDT payments must convert to HKD to pay rent, incurring high costs and long wait times.
Renminbi struggles to go global: The dollar accounts for 58% of global foreign exchange reserves ([International Monetary Fund - Currency Composition]), while the Renminbi only accounts for 2.5%. Chinese companies are often forced to use dollars, increasing fees and exchange rate risks. It's like wanting to buy something with HKD, but the store only accepts dollars.
Renminbi stablecoins and HKD stablecoins can solve these issues. Renminbi stablecoins make Belt and Road transactions faster and cheaper; HKD stablecoins rely on Hong Kong's international trust to attract global users, working together to reduce dollar dominance. But how to make the world accept these two stablecoins? Let's look for answers in history.
🌟Historical Lessons: The Secret of Resource and Network Hegemony
How does currency hegemony arise? Let's look at three historical stories:
400 years ago, Spain controlled South American silver mines, producing 80% of the world's silver, promoting silver dollars using Manila galleons, which even the Ming Dynasty in China used to collect taxes. In the 1800s, Britain leveraged textile and railway technology, promoting the British pound through London banks and colonies, backed by gold. From the 1900s to the present, the United States, through oil trading and military power, has made the dollar account for 58% of global foreign exchange reserves.
What’s the secret? Control key resources (such as silver, machinery, oil) and trading networks (like galleons and colonies). Today, what resources and networks can China use to build stablecoin hegemony?
🌟 China's three killer techniques: Rare Earths, Belt and Road, and Hong Kong Blockchain Finance
We suggest that China can promote Renminbi stablecoins and HKD stablecoins in three ways to challenge the dollar stablecoin hegemony, each method focusing on key resources or trading networks:
Rare Earth Trade:
Key Resources: According to the 2024 International Energy Agency (IEA) report, China controls 90% of global rare earth refining, supplying core materials for electric vehicles and AI chips, comparable to Spain's silver.
Why effective: Rare earths are the lifeblood of technology; subsidized settlements attract buyers and boost stablecoin usage.
How to do it: If using Renminbi stablecoin for settlement, a discount of 0.5-1% can be offered. For example, a Malaysian company buying rare earths with Renminbi stablecoin incurs only a 0.1% transaction fee, far lower than the 0.7% for dollar settlements. The HKD stablecoin assists in attracting buyers who are unwilling to use Renminbi.
Belt and Road Initiative:
Trading Network: By 2024, Belt and Road transactions are expected to reach $25 trillion, covering over 140 countries, similar to Spain’s galleon network.
Why effective: A large trading volume provides application scenarios for stablecoins, and low-cost settlements increase circulation.
How to do it: Primarily use Renminbi stablecoins to settle large projects. For example, the Pakistan Belt and Road port project pays Chinese companies with Renminbi stablecoins, incurring costs of 0.1%; HKD stablecoins serve small to medium-sized transactions for Hong Kong businesses.
Hong Kong Blockchain Finance:
Trading Network: According to the 2024 report by the Hong Kong Monetary Authority, Hong Kong, as the world's third-largest financial center, handles 4% of cross-border payments. Its international network connects Asia with Europe and America, similar to the global influence of London banks, with advantages of efficient settlement (instant credit) and high trust (linked exchange rate system).
Why effective: As the world's third-largest financial center, Hong Kong has a large trading user base and international network, handling 4% of cross-border payments. If traditional financial products (such as bonds and trade financing) are introduced to blockchain and incentivized to use HKD stablecoins for settlement, it could attract global users and significantly boost HKD stablecoin usage.
Summary: These three methods leverage rare earths (key resources) and the Belt and Road and Hong Kong financial networks (trading networks) to jointly promote Renminbi stablecoins and HKD stablecoins, replicating historical currency hegemony models.
🌟🌟🌟 How Renminbi and HKD stablecoins support China's strategies
How Renminbi stablecoins and HKD stablecoins collaborate to support
China's three major strategies? Here are their roles and complements:
Renminbi Stablecoin: Driving Rare Earths and Belt and Road:
Why use for rare earths and the Belt and Road?: Backed by the Chinese economy (2024 GDP approximately $18 trillion), suitable for large trade settlements. A 0.5-1% discount promotes the internationalization of the Renminbi, reducing reliance on the dollar (58% of foreign exchange reserves, [International Monetary Fund - Currency Composition]). Rare earths and the Belt and Road need a strong economic backing, making Renminbi stablecoins the most suitable.
Example: A Pakistani company pays for Belt and Road railway projects using Renminbi stablecoins, incurring costs of 0.1%; a Malaysian company purchases rare earths with Renminbi stablecoins, saving 0.7% on dollar settlement fees.
Limitations: The Renminbi accounts for 2.5% of foreign exchange reserves, and Europe and America are reluctant to use it due to political resistance.
HKD Stablecoin: Promoting Hong Kong Blockchain Finance:
Why use for Hong Kong Blockchain Finance?: As the world's third-largest financial center, Hong Kong has a wide international trading network and accounts for 4% of cross-border payment share. Its linked exchange rate system (HKD to USD at 7.75-7.85) ensures currency stability, and an independent judicial system enhances international trust. After the stablecoin regulations are perfected in 2025, HKD stablecoin settlements for digital bonds and trade financing will have transaction fees of only 0.3%, with instant credit, attracting global investors and businesses.
Example: International investors buy Hong Kong digital bonds with HKD stablecoins, enjoying stable returns without needing to convert to USDT; Hong Kong businesses use HKD stablecoins to pay Southeast Asian suppliers, with transaction fees of only 0.3%.
Limitations: Hong Kong's economy is small (2024 GDP approximately $400 billion), and HKD circulation is low (foreign exchange reserves at 0.1%), making it unsuitable for large-scale trade.
Complementary Relationship: Joining forces to subvert hegemony:
#Renminbi stablecoins primarily target large-scale trade in rare earths and the Belt and Road, providing trading scenarios; HKD stablecoins promote blockchain finance to attract international financial users, with funds flowing between the two, cooperating to expand influence.
#HKD Stablecoin avoids political resistance from the Renminbi thanks to Hong Kong's neutrality (independent judiciary), attracting European and American users, indirectly supporting the Belt and Road Initiative and rare earth trade.
Summary: These two stablecoins help China reduce American trading restrictions, lower exchange costs, and promote the internationalization of the Renminbi, enhancing financial autonomy and global influence through three major strategies.
Hong Kong Blockchain Finance not only supports international settlements but also opens new opportunities for investors, making it worth attention for newcomers.
Investment potential of Hong Kong Blockchain Finance
Hong Kong Blockchain Finance provides new opportunities for investors, particularly attractive to newcomers. Hong Kong investors should pay attention to the Monetary Authority and financial institutions to see which traditional financial products are being introduced to blockchain, seizing potential opportunities.
Here are three potential products we speculate:
Digital Bonds: Issued by banks, providing stable returns (approximately 3-5% annualized) settled in HKD stablecoins, with transaction fees of only 0.3%. For example, if you invest in digital bonds through a regulated exchange, you save on dollar conversion fees.
Trade Finance Tokens: Provide short-term financing for small and medium-sized enterprises, with high liquidity, moderate risk, suitable for stable returns.
Real Estate Tokens (#RWA): Splitting Hong Kong properties into digital assets, with a low entry threshold (starting from thousands of HKD), allowing participation in property appreciation.
How will these opportunities affect you? Newcomers can explore blockchain finance trends from the following directions.
What can novice investors pay attention to?
**This article is for informational reference only and is not investment advice.** Try paying attention to these:
Hong Kong Regulatory Dynamics: The new #Stablecoin law in 2025 may bring new projects; check the Monetary Authority announcements
Digital bonds, trade finance tokens, or real estate token projects from regulated trading platforms in Hong Kong, to understand the application scenarios of HKD stablecoins.
