Payments and the Renminbi: Exchange Controls, T/T, L/C, CIPS, Alipay and Fapiao

The renminbi (RMB, 人民币, 'the people's currency') is issued by the People's Bank of China; its unit is the yuan (元, colloquially 块 kuài). Onshore, in mainland China, the currency trades as CNY within a daily band around a central parity set by the central bank, and the capital account is controlled: converting yuan into foreign currency, or moving currency across the border, requires a purpose the rules allow and documents that prove it. Offshore, in Hong Kong, Singapore, London and elsewhere, the same currency trades as CNH without those controls, at a rate that normally sits close to CNY but can diverge under stress. A foreign company paying a Chinese supplier in renminbi from abroad pays CNH; the supplier receives CNY once the bank converts.

The State Administration of Foreign Exchange (SAFE) supervises cross-border flows. For trade in goods, the current account is open in principle: a Chinese exporter may receive foreign currency and convert it, and an importer may buy foreign currency to pay abroad, but the bank must match each payment to a customs declaration, contract and invoice under the goods-trade foreign-exchange verification rules, and companies are graded on their record. This is why Chinese suppliers send a contract and a proforma invoice with every payment request, why a payment that does not match a declaration can be held, and why a supplier may refuse to receive money from a third party's account.

Capital-account flows — investment, loans, dividends — need registration with SAFE through the bank; the rules have loosened repeatedly (cross-border cash pooling, the free-trade zone pilots, easier profit repatriation) but remain paperwork-intensive.

Telegraphic transfer (T/T, 电汇) is the default: a SWIFT payment to the supplier's corporate account, typically 30 % on order and 70 % against a copy of the bill of lading or before release of the goods. Letters of credit (信用证) are used for large or first orders: the buyer's bank undertakes to pay against documents that prove shipment and conformity — bill of lading, invoice, packing list, certificate of origin, inspection certificate — so the seller has bank security and the buyer pays only when the documents are right; fees run to a few tenths of a percent and document errors delay payment. Documentary collection (D/P, D/A) sits between the two. Marketplace escrow such as Alibaba's Trade Assurance holds the buyer's money until delivery is confirmed and suits small orders. Open-account terms are extended only to long-standing customers.

Currency choice is a negotiation. Quotations in US dollars are standard; a growing share of suppliers accept renminbi (CNH) settlement, which removes the exchange-rate margin they otherwise build into a dollar price and can be cheaper for the buyer. Chinese customs reported that about a quarter of China's goods trade was settled in renminbi by 2024.

Most dollar and euro payments to China travel over SWIFT messaging through correspondent banks. Renminbi payments increasingly use China's Cross-Border Interbank Payment System (CIPS), launched in 2015 and run under the central bank, which clears and settles renminbi between direct participants (mostly Chinese and large foreign banks) and indirect participants worldwide; CIPS reported about 1,700 participants in roughly 120 countries in 2025 and still relies on SWIFT messaging for much of its traffic. For a foreign payer nothing changes on the surface — the bank routes the payment — but a renminbi invoice paid through a CIPS-participant bank settles faster and with fewer intermediary fees than a dollar payment through several correspondents.

The digital yuan (e-CNY, 数字人民币) is central-bank money in a wallet app, piloted since 2020 in a growing list of cities and provinces and used for retail payments, government disbursements and some wholesale and cross-border trials, including the mBridge project with Hong Kong, Thailand, the UAE and Saudi Arabia. For foreign visitors an e-CNY wallet can be opened with a passport and topped up with a foreign card; for trade it is not yet a normal settlement channel, and the interest for exporters and importers is in cross-border pilots rather than in today's payments.

Mainland China is a mobile-payment economy; cash is accepted by law but rare, and foreign cards work at hotels and large shops but not at the noodle stand or the taxi. Since 2023 Alipay and WeChat Pay accept foreign Visa, Mastercard, JCB, Discover and Diners cards linked in the app with passport verification, and in 2024 the single-transaction limit was raised to 5,000 US dollars and the annual limit to 50,000; small payments below 200 US dollars need no extra verification. A business visitor should link a card to both apps before arrival, keep some cash for emergencies, and expect QR-code payment everywhere from the airport train to the trade-fair canteen.

A fapiao (发票) is an official VAT invoice issued through the tax authority's system; it is the only document that supports a VAT deduction or a business expense in China, and Chinese customers will ask for one. Since the roll-out of fully digitalised e-fapiao to most taxpayers in 2024, invoices are issued and received electronically. A foreign company selling to Chinese customers from abroad does not issue fapiao — its customer handles import VAT on the declaration — but a foreign-invested company in China does, and its compliance is checked against them. For services bought from abroad, the Chinese payer withholds VAT and income tax before remitting, which is why cross-border service invoices net out lower than their face value.

A wholly foreign-owned enterprise repatriates profit as dividends after the annual audit, corporate income tax (25 % standard, 15 % for qualifying high-tech and encouraged-industry companies) and the statutory reserve allocation of 10 % of after-tax profit until the reserve reaches half of registered capital; the bank remits against the audit report, the tax clearance and the board resolution, with 10 % withholding tax on the dividend unless a treaty lowers it. Service fees, royalties and intercompany charges are alternatives that attract transfer-pricing scrutiny and withholding tax. Registered capital can be reduced or returned only through a formal capital-reduction procedure. The practical advice is to plan the exit of cash when the company is set up, not when the profit has accumulated.