China is considering the introduction of yuan-backed stablecoins, signaling a potential policy shift from its 2021 ban on cryptocurrency trading and mining. This initiative aims to enhance the yuan's role in global finance and counter the influence of USD-backed stablecoins. The State Council is set to review the proposal, focusing on integrating stablecoins into trade and finance, with Hong Kong and Shanghai as key launch sites. The upcoming Shanghai Cooperation Organisation Summit may further address the use of yuan stablecoins in cross-border trade. Despite challenges such as strict capital controls, China views stablecoins as a strategic tool in the global currency competition.