Businesses may benefit from transacting in renminbi (RMB), the system of currency of the People's Republic of China, for cross-border transactions with trading partners in mainland China and for intercompany payments with subsidiaries in mainland China. Businesses transacting in renminbi may be able to enhance relationships with trading partners, obtain better pricing, and manage foreign exchange risk.

Whether a business is remitter or beneficiary in mainland China or outside of mainland China, in the United States or elsewhere, the key to benefiting from RMB settlement is to know the rules, understand the risks, and coordinate closely with counterparties in mainland China. Businesses can also benefit from a partnership with a bank with experience in advising and processing RMB transactions.

Here’s what businesses need to know:

1. What is RMB cross-border settlement?

RMB cross-border settlement allows cross-border transactions to be settled in China’s currency. Historically, cross-border trade settlement with an entity in China was primarily conducted through USD. As part of the effort by the Chinese government to promote the use of the RMB as a trade currency, asset currency and reserve currency, in 2009, China launched a pilot program for cross-border trade settlement in RMB for designated companies in four pilot cities. Since then, RMB cross border settlement has expanded throughout mainland China and is now more commonly used.

2. What kind of transactions qualify for RMB cross-border settlement?

According to the Notice of the People’s Bank of China (PBOC) on Further Improving RMB Cross-border Business Policies and Promoting Trade Investment Facilitation: “In any cross-border transaction which may be settled in foreign exchange according to law, the enterprise may make the settlement in RMB.”[1]

In addition, according to the Foreign Investment Law of the PRC: “Foreign investors may exercise discretion in accordance with applicable law to remit into or out of China, in renminbi or any other currency, their contributions, profits, capital gains, income from disposition of assets, intellectual property royalties, lawfully acquired compensation, indemnification proceeds, proceeds of liquidation, etc.” [2]

This rule change has opened up RMB settlement for all transactions, no longer limited to goods or services trade, and includes areas such as cross-border lending/borrowing, profit repatriation, or a registered capital injection.

3. What are the benefits of using RMB for settlement?

For trade settlement, while it may appear that negotiating international agreement in USD avoids currency volatility exposure for U.S. companies, this practice often puts them at a competitive disadvantage compared to companies that transact in local currency since there are hidden costs in USD pricing. For example, a company in China may add a “buffer” to its USD pricing in order to mitigate its own foreign exchange risk, therefore indirectly exposing the U.S. company to RMB foreign exchange risk and to a higher transaction cost. With China’s changing currency regulations, companies are learning that conducting business in RMB instead of USD may be beneficial.

The PBOC has estimated that, due to embedded premiums and transactional charges, the administrative cost alone of transacting in USD is 2–3% higher than dealing in local currency. Therefore, conducting trade settlement with partners in China in RMB may provide cost savings for a company, while creating efficiencies for partners by transacting in their local currency.

U.S. company subsidiaries in mainland China typically use the RMB as their functional currency. As a result, conducting intercompany lending/borrowing, profit repatriation, registered capital injection, etc., between U.S. companies and their subsidiaries in RMB allows their currency risk to be centrally managed by the parent company through foreign exchange hedges or multicurrency accounts (MCA).

4. What are the qualifications for transacting cross-border RMB payments?

U.S Company Qualifications

For companies in the United States, there are no formal requirements for B2B payments. The only prerequisite is that their trading partner in mainland China has been activated in RCPMIS. It’s important to note that payments to and from individuals in mainland China are subject to different rules (see additional information in section seven below).

PNC offers clients the ability to remit and receive cross-border RMB payments. These transactions can be cross-currency (USD/CNY) and initiated from a U.S. dollar demand deposit account (DDA) or same currency initiated by a PNC multi-currency account denominated in CNH. 

Qualifications for Companies in Mainland China:

On the counterparty side for companies in mainland China, there are prerequisites to remit and receive cross-border RMB payments:

  • Local Chinese companies: These require activation in the RMB Cross-Border Payment Management Information System (RCPMIS). RCPMIS was established by the PBOC to collect cross-border RMB transaction information. Banks in mainland China providing RMB cross-border settlement services are required to report their RMB transactions to PBOC via RCPMIS.
  • U.S companies in mainland China (including subsidiaries or vendors): These must also be activated within RCPMIS via their banks before they are able to transact cross-border RMB payments. To become activated in RCPMIS, companies should request a form provided by their bank in mainland China. Once submitted, activation is typically completed within one to two business days. 

5. What role do banks in mainland China assume when managing companies with RMB cross-border transactions?

Banks in mainland China utilize a system of classified management for their corporate clients; based on the risk level, companies are categorized accordingly. Certain categories of companies in mainland China are considered to be higher risk and may require additional documentation to execute or receive a cross-border payments. Note that this has no impact on a U.S company transacting in a cross-border RMB settlement. 

The two classification types for companies in mainland China:

i.       Trusted Companies (可信客户): Banks will require a general due diligence review and have standard documentation requirements

ii.     Higher Risk Companies(关注客户): Banks will require an expanded due diligence review, additional screening, and additional documentation requirements

Banks in mainland China will also require supporting documents that demonstrate the background of the payment. Examples include invoices, contracts, and customs declarations. Documentation requirements may vary due to requirements and policies designated by each bank. For companies outside of mainland China, documentation requirements are subject to the local regulations where the company resides. Companies in the United States, including PNC clients, do not need to provide supporting documentation to their bank when transacting RMB payments unless otherwise requested. 

PNC’s Shanghai Representative office can provide detailed documentary requirements for specific types of goods and services.

6. Can suppliers in China receive their export Value Added Tax (VAT) rebates when transactions are settled in RMB?

Exporters in mainland China can apply for an export VAT rebate with their local tax authority. The rebate may be up to 17% of the value of the exported goods, depending on their industry.

According to regulations in China, exporting firms using RMB receive the same rebate whether the invoice is in RMB or USD. Therefore, using RMB for cross-border trade settlement would not cause any impact in VAT rebate received.

7. Can RMB payments be conducted to/from individuals in mainland China?

In the past, RMB cross-border settlement was open to companies only and did not apply to individuals in mainland China, with the exception of certain pilot cities such as Yiwu or Guangzhou.

The regulation released by PBOC in January 2018 allows banks to conduct individual cross-border settlement in RMB under Other Current Accounts Transactions on the basis of three business principles: knowing the client, knowing the business, and due diligence. Thus, each bank will determine whether this is offered to individuals. 

8. What are the major cross-border RMB clearing systems?

Cross-border Interbank Payment Systems, CIPS, is a Chinese financial telecommunications and payment system that offers clearing and settlement services for cross-border RMB transactions. Launched in October of 2015, the goal of CIPS was to improve global clearing systems and cross-border settlement in China. It is similar to CHIPS in the United States. It is currently owned by CIPS Co. Ltd. and supervised by the PBOC.

Prior to the introduction of CIPS, RMB cross-border payments could also be settled through the China National Advanced Payment Systems, CNAPS, which is similar to Fedwire in the United States. With the development of CIPS, CNAPS has shifted its use to domestic payments only. CNAPS was launched in 2009 and is currently owned and operated by PBOC. 

9. What information is required for a RMB payment that a USD payment does not have?

Payment Purpose Code

A payment purpose code is required by the PBOC for all cross-border RMB payments to mainland China. It is not required for USD or non-RMB cross-border payments. Valid payment purposes are:

If the payment group classification is…

And your payment purpose description is…

Then select this payment code…



Charity Donation


Cross Border Capital Transfer


Cross Border Goods Trade


Other Current Account Transactions


Cross Border Service Trade


RMB cross-border payments into mainland China that do not include a valid payment purpose code may be rejected. However, if an RMB payment is not remitted to a mainland China beneficiary, the payment purpose code is not required.

10. What are the best practices for cross-border RMB settlement?

Completing the items listed below are recommended prior to initiating a cross-border RMB payment with trade partners in mainland China:

  • Ensure RMB is noted as the designated currency on all transaction documents (contract, invoice, custom declaration, etc.). Documentation noting RMB may help to avoid potential regulatory restrictions.
  • Confirm with trade partners in mainland China that they are eligible to receive payments. The requirements include:
    • The company being registered and activated in the RCPMIS system through their banking provider
    • Payments are not being received by an individual. In exception cases, if a payment needs to be made to an individual, the beneficiary bank must approve that the individual is eligible for the cross-border RMB settlement.
  • Ensure that the beneficiary’s account name and account number are correct and match with the information in their bank’s system of records as well as RCPMIS.
    • It is advised to request the beneficiary’s English name to be registered in RCPMIS and that the same beneficiary’s name is provided in the payment instruction for settlement.
    • Please note that the character limitation is 140 characters in the Account Name and Address fields.
  • Obtain the beneficiary bank’s Swift BIC code (11-digit code).

How PNC Can Help Remit and Receive RMB

PNC is here to assist when opportunities arise for businesses in mainland China. PNC’s USD and CNY Accounts allow companies to remit and receive RMB payments. PNC can issue RMB-denominated import letters of credit for a company and act as the advising and/or negotiating bank for RMB-denominated export letters of credit. PNC can also support RMB-denominated standby letters of credit. The incoming funds in RMB may be received into an RMB MCA account or into a USD DDA account. PNC also can act as a confirming bank and/or discount the usance export letter of credit, similar to USD or other currencies.

For hedging foreign exchange risk, PNC provides deliverable forward contracts and forward options for various tenors using the offshore RMB currency. Non-deliverable forwards are available for the onshore currency.

To learn more about RMB settlement, get a briefing on Chinese banking, or schedule a call with our representatives in Shanghai, click here or contact your relationship manager, Treasury Management Officer, or International Advisor to learn more.