China Turns Digital Yuan into Strategic Asset for Hybrid Warfare

TLDR

• China is using the digital yuan and blockchain to strengthen its national security and economic resilience.
• A study by the Central Party School describes crypto as a tool for financial mobilization during conflict or crisis.
• China defines blockchain networks as a digital logistics front that supports liquidity and defense under pressure.
• The mBridge project links China’s CBDC with other nations to bypass SWIFT and reduce reliance on the US dollar.
• The dollar’s global reserve share has declined while China promotes digital alternatives for strategic autonomy.

China positions digital currencies as national security assets. A recent report highlights how Beijing uses blockchain to reshape finance and warfare. The strategy merges economic stability, defense funding, and geopolitical resilience through digital financial tools.

Blockchain Becomes a Digital Logistics Front

China defines blockchain networks as a “digital logistics front” vital for financial mobilization under stress or conflict. The Study Times, published by the Central Party School, outlines this shift in policy. The report says, “The battlefield now stretches into finance,” marking a strategic expansion.

China’s digital yuan supports liquidity during sanctions or banking failures, enabling internal demand and military readiness. The report says crypto allows states to “redirect liquidity when banks fail or sanctions tighten.” This function strengthens Beijing’s ability to sustain defense operations during crisis.

The study introduces a triad of “total war, hybrid war, and digital financial war” enabled by cryptographic control. Blockchain offers operational trust, data integrity, and autonomy from foreign financial pressure. The digital yuan operates independently of the SWIFT system and U.S. sanctions.

China’s mBridge Project Seeks Financial Independence.

China leads the mBridge project with Saudi Arabia, Thailand, and the UAE to bypass U.S. financial rails. This initiative connects central bank digital currencies and enables settlements outside Western networks. The project enhances China’s monetary sovereignty in cross-border transactions.

Economist Barry Eichengreen reports the dollar’s reserve share dropped from 71% in 2000 to 58% in 2024. He notes states are “moving away from the dollar… for geopolitical reasons.” China leverages this shift to promote its own digital financial systems.

Through mBridge, China builds infrastructure to insulate against external shocks and expand financial influence. The platform supports direct settlements and regional trade alignment. China uses blockchain not only for speed but also for control and resilience.

Digital Currencies Shape New Battlefield Lines

The TRM Labs 2025 Crypto Crime Report reveals that sanctioned exchanges processed 85% of illicit inflows to restricted markets. Exchanges like Garantex in Russia and Nobitex in Iran continue operating despite sanctions. Terror groups have used stablecoins like USDT on TRON to raise funds.

Israel has responded by freezing millions in related accounts linked to these transactions. China, meanwhile, embeds crypto in statecraft, not just commerce. Its approach prioritizes sovereign control, not open decentralization.

Military theorist Jason Lowery calls Bitcoin “a non-lethal form of power projection.” China embraces this view as part of its defense strategy. Blockchain systems now blend cyber deterrence, logistics security, and wartime finance.

China treats digital finance as a pillar of national resilience. Its digital yuan is not just currency, it is infrastructure for control. Through blockchain, China is preparing for a potential geopolitical confrontation in the financial and digital domains.

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