Frequently asked questions
Find answers to questions on how to start using the RMB, which regulations apply to companies trading in the currency and how trading in the RMB can benefit business processes.
- Why should I use the RMB?show/hide
There are various reasons to consider using the renminbi.
Contracts with Chinese firms typically have the price of converting renminbi to dollars priced in, so it’s hard to know the true cost of the underlying goods. By invoicing in renminbi, you can shave around 2-3% off your costs.
In addition, the rise of the two-way movement of CNY has made it more costly to manage FX onshore. Managing the FX risk directly will eliminate the FX premium, making contracts cheaper still.
Using the renminbi for settlement will also speed up your processes. This is particularly the case since recent changes have waived some of the documentation requirements for settling trades in RMB.
There have also been pilot initiatives on simplified documentation checking launched to a number of provinces in China, to provide convenience to cross-border trade settlement in RMB. Mainland banks in China can base on the “Know-your-customer”, “Know-your-business” and due diligence to waive the supporting document submission by eligible corporates under this pilot arrangement. This greatly reduces the operational burden of corporates in China on the documentation requirements and results in reduced turnaround time for payments.
- When's the right time to start using the RMB?show/hide
Now is a good time to consider making the move into RMB – for three reasons.
Firstly, Chinese firms typically price FX costs into their contracts, and this conversion premium has increased since the widening of the RMB trading band in April 2012. Settling in RMB would cut these costs and give you greater control over your FX risk.
Secondly, the astonishing pace of RMB liberalisation is expected to accelerate further. With regulators, domestic banks and corporates all on board, doing business in RMB is getting easier all the time.
Thirdly, many countries with corporate already started invoicing their trade with China in RMB. The number is increasing and you can find the market momentum of RMB activities offshore through Standard Chartered RGI (RMB Globalisation Index).
- How can my company benefit from RMB trade settlement?show/hide
Settling trades in RMB will allow you to expand your business with trading partners in mainland China. You will be able to negotiate better contract terms, extending Days Payable Outstanding or shortening Days Sales Outstanding.
You'll also improve your customer relationships through more transparent pricing for RMB denominated goods from mainland suppliers.
In addition, you can use an RMB cash position as a natural hedge for two-way import and export flows with China. You will also be able to centralise and proactively manage your company’s RMB exchange risk.
- Which companies are eligible for RMB trade settlement with China?show/hide
Cross-border RMB transactions are available for goods and service transactions across the whole of mainland China. In June 2012, the RMB trade settlement scheme was expanded to allow all Chinese enterprises with import and export license to conduct foreign trade in RMB.
Companies on the surveillance list can still conduct cross-border trade in RMB. However, their export proceeds cannot be retained overseas and their transactions are monitored closely by the settlement banks in mainland China.
- Can local or foreign currencies be converted into RMB for trade settlement without using an RMB account?show/hide
It depends where you are.
If you are based in Hong Kong, you will have to execute all RMB trade settlement transactions through an RMB account. This is for the purpose of regulatory reporting.
If you are based outside China and Hong Kong, you can settle trades without using an RMB account.
- After converting currency to RMB, can the proceeds be parked on deposit?show/hide
Yes, provided the RMB FX request is for cross-border China trade and the payment to China is to be remitted to China within three months. The onshore FX rate from the agent/clearing bank will be referenced.
For other RMB FX requests, the offshore deliverable market rate will be referenced. There is no specific regulatory restriction on how to use the converted RMB fund outside mainland China.
- Is there any limit on how much foreign currency can be converted into RMB and remitted cross-border?show/hide
Yes, if the exchange is ultimately squared through the RMB Clearing Bank. In this instance, the currency conversion is limited to the amount of the transactions to be settled and the transactions have to be for settling cross-border goods trade.
There is no specific restriction on RMB conversion if the exchange is squared through the offshore interbank deliverable market in Hong Kong.
- Can foreign currency be converted into RMB before payment is due?show/hide
Yes. If the exchange is ultimately squared through the RMB Clearing Bank, you must have proof your transaction is genuine.
The participating bank will need to ensure that the converted RMB funds are not being used for other purposes. They will remit the funds to the mainland counterpart on the payment date within three months of the FX conversion.
If the exchange is squared through the offshore deliverable interbank market in Hong Kong, the underlying transactions can be for general purposes, i.e. not necessarily trade-related.
- Can a company with multiple RMB accounts transfer funds to a single account?show/hide
Yes. There is no specific restriction by China’s regulators on RMB fund transfer outside mainland China. For example, in Hong Kong, RMB can be freely transferred among corporate and individual RMB accounts.
- Can RMB remittances or FX transactions be initiated at Standard Chartered Bank branches?show/hide
It depends where you are.
In Hong Kong, in addition to Straight2Bank, all our RMB trade settlement services are available at our Wholesale Banking counters at designated branches. You can visit our Corporate Express Centre for all RMB services offered on your RMB account. To deposit or withdraw RMB cash from your RMB account, you can also visit any of our branches.
Outside China and Hong Kong, RMB transactions are only available via Straight2Bank. RMB services are not available at Wholesale Banking branches.
- Can an overseas exporter receiving payments in RMB use those funds freely?show/hide
RMB funds received can be used freely as long as they do not flow back to mainland China (otherwise they are subject to Chinese regulations).
- What types of RMB financing are allowed?show/hide
Companies are eligible for all types of financing services outside China. However, you should ensure you have the ability to repay the financing in RMB. If any RMB financing proceeds need to flow into China, Chinese regulations apply and approval is required.
- Can companies issue RMB bonds?show/hide
Companies are allowed to issue RMB bonds in Hong Kong. Whether the RMB funds can be used in mainland China is subject to mainland China regulations and control by authorities (this is applicable to Hong Kong only).
- What documents do I need to submit for RMB remittance to and out of mainland China?show/hide
Mainland authorities and banks are responsible for verifying whether transactions undertaken by mainland counterparts comply with the relevant rules.
Chinese counterparts to banks in the mainland will require you to supply trade supporting documents for checking.
Mainland settlement banks are responsible for verifying the cross-border remittance on whether transactions undertaken by the mainland counterparts comply with the relevant rules in China.
Therefore, banks in the mainland China will require your Chinese counterparts to provide trade supporting documents for checking as appropriate.
Banks outside mainland China will process the RMB transactions in accordance with the usual banking practices and will remain vigilant against money laundering or other activities that violate overseas laws and regulations.
Please note that if there is any exchange requested for squaring with the RMB Clearing/Agent Bank, as this onshore FX rate is only eligible for cross-border goods trade with China, the participating bank handling this request may require you to provide supporting documents before converting from foreign currency to RMB. In case, only offshore FX deliverable market is used for the exchange, no supporting document is needed.
- Can companies open an RMB account with Standard Chartered?show/hide
If you are a company, you can open an RMB account with Standard Chartered for trade settlement. The account is available in most countries.
Please contact your Relationship Manager for details.
- Are there any special requirements for opening an RMB account for RMB trade settlement with China?show/hide
RMB account opening involves the same practices as other foreign currencies.
- Can a company have a surplus RMB balance in its RMB account?show/hide
Yes. Current guidelines suggest there is no specific time constraint on how long a surplus RMB balance can remain in the RMB account.
- What is a Non-Resident RMB Account?show/hide
A Non-Resident RMB Account – or NRA – is an RMB account onshore in China, opened by an overseas foreign enterprise.
- Can companies open a Non-Resident RMB Account (NRA) in China?show/hide
Yes. Non-resident accounts are available for companies outside mainland China.
- Are fund transfers allowed between an NRA in China and an RMB account abroad?show/hide
Yes, companies can transfer RMB from the non-resident account in mainland China to RMB accounts outside mainland China (e.g., Hong Kong and Singapore) without underlying trade, i.e. one-way, as long as the accounts are under the same name. Transferring RMB from the RMB offshore accounts to the onshore RMB NRA is, however, not permitted.
Spot FX is permitted under RMB NRA, the converted FCY could be either paid out or parked in account owner’s foreign currency NRA account. No special document checking is needed for these FX request.
- Why should I choose Standard Chartered for RMB transactions?show/hide
Standard Chartered is a leader in RMB services. As a major international trade bank with direct membership of local clearing houses in China, we offer in-depth local knowledge of the mainland market.
We have one of the largest foreign bank networks in China with access to many mainland corporates and strong working relationships with local banking associations and authorities.
Our strong foreign exchange capabilities help you mitigate RMB exchange risk and our user-friendly Straight2Bank electronic platform allows you to execute transactions quickly and securely.
- What RMB trade settlement services are available from Standard Chartered outside mainland China?show/hide
The following are offered subject to relevant guidelines and regulations from authorities:
- RMB account services
- Two-way exchange services between RMB accounts and foreign currency accounts
- Remittance services – inward and outward
- Trade settlement and finance services – Letter of Credit opening and advising, collection and trade finance
- Liquidity management
Our expertise in renminbi makes us the right partner to help you grow your business.
We have a range of renminbi solutions to help you make the most of the world’s growth currency.
For renminbi advice and insights, please speak to your Relationship Manager.