China’s Digital Silk Road: Conflux & AxCNH Reshaping Belt and Road Initiative | 2025 Analysis

25 Aug, 2025
| Salome K

China’s Digital Silk Road: How Conflux Network and AxCNH are transforming the Belt and Road Initiative

In a world where technology and geopolitics are increasingly merging, China is using blockchain not merely as an innovation platform, but as a strategic weapon. The launch of AxCNH, a yuan-pegged stablecoin on the Conflux Network, is not merely a technical advance. It marks a fundamental shift in how states use digital infrastructure to achieve geopolitical ambitions.

This development coincides with a new chapter in the Belt and Road Initiative (BRI), China’s most ambitious foreign project since the founding of the People’s Republic. With more than 140 participating countries and a cumulative value exceeding $1 trillion, China is seeking digital solutions to the financial obstacles that increasingly hinder traditional cooperation.

By our International Platform editorial team – August, 2025

Conflux Network: Between Decentralization and State Control

A unique position in China’s ecosystem

In a country where cryptocurrency trading is severely restricted, Conflux is a remarkable exception. The network is the only public blockchain fully compliant with Chinese regulations. Conflux was founded by researchers at the prestigious Tsinghua University, with strong ties to the Chinese government, and was developed to combine innovation with political control.

This paradox—decentralization within a state-regulated framework—makes Conflux unique. It serves as a testing ground for Beijing to deploy blockchain technology without losing its grip on monetary sovereignty.

Technical innovations

The Conflux 3.0 upgrade (August 2024) significantly boosted the network’s performance, reaching 15,000 transactions per second. Even more importantly, Conflux features so-called “sovereign integration modules,” which allow it to adapt to various regulatory frameworks—from Singapore to Nigeria. This makes the network ideally suited for the diverse group of BRI countries.

The birth of AxCNH

AxCNH, launched in July 2024 in partnership with AnchorX and Eastcompeace, is strategically pegged to the offshore yuan (CNH) instead of the highly regulated onshore yuan (CNY). This makes the stablecoin suitable for international trade while allowing Beijing to maintain control over domestic money flows.

The timing is significant. China is reorienting the BRI from megaprojects to “digital and sustainable infrastructure,” in which AxCNH can serve as a key component.

BRI in transition: from concrete to bytes

The Belt and Road Initiative launched in 2013 with a focus on physical infrastructure: railways, ports, and highways that were supposed to connect Asia, Africa, and Europe. Financial bottlenecks quickly arose: currency risks, high transaction costs, and slow payments.

Since 2020, Beijing has been emphatically talking about a “Digital Silk Road.” The pandemic accelerated this process. The focus shifted to 5G networks, e-commerce, fintech, and digital currencies. AxCNH fits perfectly into this new paradigm: it offers real-time transactions, lower costs, and more efficient trade settlement.

AxCNH in practice: regions and case studies

Central Asia: hub of the land route

In countries like Kazakhstan and Uzbekistan, AxCNH makes it possible to:

to finance infrastructure projects faster;
pay local contractors directly;
to make remittances from migrant workers cheaper and faster.

Kazakhstan is already serving as a testing ground: a pilot project with Chinese oil companies showed that payments through AxCNH improved cash flow by 40% and reduced transaction costs by 80%.

Southeast Asia: Digital Innovation and Maritime Routes

The region already has strong fintech adoption. Integrating AxCNH into platforms like GrabPay or ShopeePay would accelerate cross-border payments. In Indonesia, e-commerce platforms are experimenting with AxCNH to enable instant yuan-rupiah transactions, lowering checkout fees and attracting Chinese merchants.

Africa: Leapfrogging in Financial Inclusion

Africa has a young, digitally-driven population but limited banking infrastructure. Integrating AxCNH with mobile payment systems like M-Pesa could give millions of unbanked people access to international trade. A pilot in Nigeria showed that project financing was 35% faster and 50% cheaper.

Geopolitical dimensions

Yuan internationalization

With AxCNH, Beijing is creating a parallel trading network where transactions are settled in yuan instead of dollars. This aligns with China’s long-term ambition to reduce its dependence on the dollar system.

Technological standardization

By positioning the technology early, China can set standards that are later adopted globally – a “first mover advantage” that worries the West.

Financial surveillance

Blockchain transactions are transparent. For Beijing, this means access to valuable data on international trade flows in BRI countries, a subtle form of soft power and geopolitical intelligence.

International reactions and competition

The US and the EU view AxCNH with suspicion. Washington fears that BRI countries will become financially dependent on Chinese systems, while Brussels points to privacy and transparency risks.

Western alternatives are developing:

the ECB’s Digital Euro (expected rollout in 2027);
the FedNow infrastructure and digital dollar initiatives;
G7’s Global Partnership for Infrastructure, as a counterpart to the BRI.

Yet China is ahead: AxCNH is live and being tested in BRI projects, while Western alternatives are often still in the pilot phase.

Russia: Between Autonomy and Dependence on China’s Digital Payment Rails

The Digital Silk Road also directly affects Russia. Since 2023, the yuan has been the most traded foreign currency in Moscow, and more than 90% of bilateral trade between Russia and China is now settled in yuan or rubles. This shifts a large portion of Russian trade settlement to Chinese infrastructure such as CIPS, and in the future, possibly also via stablecoins like AxCNH.

Moscow is working on its own alternatives: the digital ruble, with pilots and the first budget payments scheduled for 2025; the internal payment system SPFS; MIR payment cards; and even experiments with crypto for cross-border transactions. These initiatives demonstrate Russia’s ambition to maintain monetary sovereignty.

Yet, the asymmetry is growing. When Chinese banks restrict payments due to sanctions, transactions with Russia are almost immediately stalled. Moreover, Beijing is moving faster in programmable money: the e-CNY is already the largest CBDC pilot in the world, the international mBridge project is at MVP level, and AxCNH represents a stable instrument for international trade. This puts China far ahead of Russia in the development of blockchain and digital currencies.

The outcome is not a total Chinese hold on the Russian economy, but rather growing transactional influence. Through its currency choices, bank compliance, and technological standards, China is increasingly able to dictate the parameters of Russia’s international trade. In this sense, Moscow risks not so much being dominated financially in the future, but rather becoming more dependent on the digital infrastructure and monetary ecosystems that Beijing designs.

Risks and challenges

Internal challenges

China’s economy is slowing, and there’s reluctance within the Politburo to internationalize the yuan too quickly. AxCNH is therefore balancing between geopolitical ambition and monetary prudence.

Technical and regulatory risks

Cyber threats, potential bugs in smart contracts, and varying regulations across the 140 BRI countries remain obstacles. Geopolitical pressure—particularly from the US—could also deter some countries.

Economic impact: macro and micro

Economic models suggest that successful implementation of AxCNH in BRI countries could lead to:

5–8% reduction in transaction costs;
15–20% faster payments;
10–15% increase in trade between China and BRI partners.

For businesses and individuals, this means lower costs, faster cash flow and better access to financing.

Future scenarios

Mass adoption (2025–2030): AxCNH becomes the primary payment system for BRI trade; yuan usage doubles; Conflux grows into a global infrastructure.
Regional success (2025–2028): Strong adoption in Central and Southeast Asia, but limited impact elsewhere; the dollar remains dominant.
Limited Adoption (2025–2027): Geopolitical resistance and technical issues limit AxCNH to niches.

A turning point in the financial world order

The launch of AxCNH is more than a fintech experiment. It’s a geopolitical project that could shift the balance of power in the global financial architecture. For China, it’s a tool to internationalize the yuan, set technological standards, and exert economic soft power.

For BRI countries, it offers opportunities for lower costs, faster trade, and financial inclusion. For the rest of the world, it heralds a phase in which digital currencies and blockchain networks compete with the dollar system that has dominated since 1945.

Whether AxCNH sparks a fundamental revolution or remains merely a regional innovation depends on trust, security, and the geopolitical context. But one thing is clear: the Digital Silk Road is no longer a pipe dream. It has begun—and will help shape the 21st-century financial world order.