Trading with China in renminbi (RMB)

by David Irish | August 22, 2023

China has historically actively promoted the use of its currency, the renminbi (RMB) or yuan, in international trade and finance to reduce its reliance on the US dollar and enhance its own economic influence. China’s efforts to incentivize exporters to price their products in RMB rather than US dollars have included several strategies:

Trade Finance Facilities: Chinese banks offer trade finance facilities and favourable terms to exporters who choose to use RMB in their transactions. These facilities can include preferential interest rates, lower transaction fees, and simplified processes, making it more attractive for exporters to use RMB.

Access to Domestic Markets: Exporters who price their products in RMB may gain better access to China’s domestic market, which is one of the largest consumer markets in the world. This access could potentially lead to increased sales and revenue for exporters.

Financial Incentives: The Chinese government has at times provided financial incentives to exporters who choose to use RMB. These incentives could include subsidies, tax benefits, or other forms of support to encourage the use of RMB in international trade.

Exchange Rate Stability: China has taken steps to stabilize the exchange rate of the RMB, making it a more attractive and reliable currency for international trade. A stable exchange rate can reduce uncertainty and risk for exporters and importers.

Reduced Exchange Rate Risk: Pricing products in RMB can help mitigate exchange rate risk for both exporters and importers. Fluctuations in the US dollar exchange rate can impact the cost of goods and affect profit margins.

Internationalization of RMB: China’s efforts to internationalize the RMB have led to the establishment of offshore RMB centres in various global financial hubs. These centres provide a platform for businesses to hold and use RMB for international transactions. This allows for more efficient and cost-effective currency conversions and trade settlements in RMB.

RMB-denominated Financial Instruments: China has developed RMB-denominated financial instruments, such as bonds and other investment products, to facilitate cross-border transactions and investment using RMB.

Trade Agreements and Partnerships: China may negotiate trade agreements and partnerships that encourage the use of RMB in trade settlements. This can be done by offering preferential trade terms or benefits to countries that choose to use RMB.

Promotion and Education: The Chinese government and financial institutions actively promote the benefits of using RMB in international trade through seminars, workshops, and educational campaigns aimed at raising awareness among exporters and importers.

What does this mean for South African importers?

The primary benefit is to be able to negotiate a discount for paying for your imports in RMB rather than USD. This is simple economics. For the reasons mentioned above the cost and risk to a Chinese exporter should be less when pricing in RMB relative to USD. You would expect that in a competitive environment they would be willing to pass some of this benefit on to their customers in order to secure the sale.

China would appear to be on a particular drive to boost RMB exports at present as discounts of up to 5% have been obtained by clients of one of South Africa’s top banks. The norm would be between 2% and 4%. These can make a significant difference to your business’ bottom line as well as increase your own competitiveness.

Some pointers to note:

Terminology: The RMB can also be referred to as CNY or CNH which can be a bit confusing. RMB and CNY are often used interchangeably but they have slightly different meanings. RMB is the overarching term that includes all aspects of China’s currency system, while CNY is the specific unit of currency used in transactions and exchange rate quoting.

CNH refers to the offshore Chinese yuan, which is used outside Mainland China. CNH was introduced to facilitate international trade and investment involving the yuan. It is traded freely in offshore financial markets, such as Hong Kong. The exchange rate of CNH is determined by the market forces of supply and demand, without strict control by the Chinese government, unlike the CNY which is strictly controlled.

The distinction between CNY and CNH arose due to China’s efforts to internationalize its currency while maintaining control over its domestic economy.

So, when you transact as a South African importer you will remit CNH to Hong Kong, for example and the Hong Kong bank will pay on CNY to your supplier.


  1. Check with your supplier whether their bank will accept CNY for exports. Some regions in China do not allow it.
  2. You cannot remit CNY to an individual, it must be a company and the company’s name must correspond with the account number.
  3. You are not able to transact on a same day or tom basis, it must only be for spot as a minimum.
  4. All Excon documents must be submitted on the day of the trade, otherwise you will experience delays in payment.

Are you trading in RMB with your Chinese suppliers? If not, it would be well worth starting the conversation.

Do you need assistance with managing your foreign exchange function? Contact Dale Petersen on 021 819 7802 or at We’d love to connect with you.


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