Introduction

If you source goods from China, one of the most consequential and frequently overlooked decisions you’ll make is which currency to use when settling your invoices. Should you pay in U.S. dollars (USD) as most traders have done for decades? Or is there a strategic advantage to paying in Chinese renminbi (RMB/CNY)?

The answer is not one-size-fits-all. Your optimal choice depends on your contract volumes, supplier relationships, FX exposure tolerance, and broader geopolitical considerations.

This guide breaks down how to decide between USD and RMB (CNY), especially for exporters and trading businesses, and how modern payment platforms like Yogupay can simplify the process.

Understanding the Currencies at Play

Before diving into strategy, it helps to clarify a common point of confusion: when paying Chinese suppliers in RMB, you are almost always dealing with two distinct versions of the currency:

• CNY — Onshore RMB (CNY): The yuan circulating inside mainland China, subject to strict capital controls managed by the People’s Bank of China (PBoC) and the State Administration of Foreign Exchange (SAFE). Foreign businesses cannot freely hold CNY accounts or transfer CNY across borders without regulatory approval.
• CNH — Offshore RMB (CNH): The yuan traded freely in Hong Kong, Singapore, London, and other offshore financial centers. CNH has its own floating exchange rate, separate from the onshore fix, and can be used for cross-border trade settlement without the same capital control restrictions.

For most international importers paying Chinese exporters, CNH is the practical and regulatory-friendly route to settling invoices in renminbi. Throughout this post, ‘RMB’ or ‘CNH’ refers to this offshore market.

The Case for Paying in USD

The U.S. dollar remains the undisputed global reserve currency, and there are strong structural reasons why most Chinese trade has historically been invoiced and settled in dollars.

• Universal Liquidity and Acceptance

USD is accepted by virtually every Chinese exporter, regardless of size or sector. For a small factory owner in Guangdong, receiving dollars is operationally simple; they convert at their bank and move on. There is zero ambiguity, no special account setup, and no counterparty confusion.

• Familiar Pricing Benchmark

Commodities, electronics components, textiles, and machinery are almost universally quoted in USD on international markets. When you price and pay in USD, you are working from the same benchmark your competitors use, making it easier to compare offers across multiple suppliers globally.

• Deep Hedging Market

If you want to lock in your costs by hedging your FX exposure, the USD market offers the deepest, most liquid forward and options market in the world. You can hedge six, twelve, or even twenty-four months forward at tight spreads, something far harder to do in CNH.

• Regulatory Simplicity for the Buyer

From the importer’s side, paying USD from a USD account through SWIFT is a well-understood process. Your compliance team knows the procedures, your bank knows the requirements, and documentation is straightforward for customs and accounting.

The Case for Paying in RMB (CNH)

China has been systematically internationalizing its currency since the 2009 launch of its cross-border RMB pilot program. Today, settling in RMB is not only possible, but it can also be financially and strategically advantageous.

• Potential Price Discounts from Suppliers

This is the most compelling and immediate reason to consider RMB settlement: Chinese exporters who accept payment in their home currency eliminate their own FX conversion costs and exchange rate risk. In a competitive negotiation, many suppliers, particularly mid-sized manufacturers with RMB-denominated operating cost will pass on a portion of those savings in the form of a lower invoice price or extended payment terms. Anecdotal estimates from trade finance professionals suggest discounts of 1–3% are achievable in favorable negotiations, which is significant at scale.

• Reduced Correspondent Banking Risk

USD payments from certain jurisdictions must pass through U.S. correspondent banks, which apply their own compliance screening. This can lead to unexpected payment delays or even rejections for buyers from regions the correspondent bank views as higher-risk. RMB payments routed through the China Interbank Payment System (CIPS), China’s alternative to SWIFT for yuan transactions, bypass this exposure entirely.

• CIPS: China’s Competing Payment Infrastructure

CIPS has expanded significantly since its launch in 2015 and now connects banks in over 100 countries. Payments through CIPS can settle faster than SWIFT for CNH transactions, with potentially lower fees when both parties are directly connected. For high-volume trade relationships, this infrastructure advantage compounds over time.

• Geopolitical Diversification

In an era of increased weaponization of the dollar payment system, including sanctions designations that can freeze correspondent banking access, buyers from certain jurisdictions may see RMB settlement as a strategic hedge against dollar-system risk. This is particularly relevant for buyers in Southeast Asia, the Middle East, Africa, and Russia, where dollar access has become increasingly politicized.

• Alignment with China’s Policy Direction

Beijing actively incentivizes RMB cross-border settlement. Export tax rebate policies, lower reserve requirements for RMB trade accounts, and preferential treatment in free trade zones all tilt the regulatory environment in favor of RMB settlement. Aligning with this direction can improve relationships with Chinese government-affiliated suppliers and facilitate smoother entry into certain regulated Chinese market segments.

Key Factors to Consider When Choosing USD vs RMB

1) Your Revenue Currency

If you earn in USD → paying in USD reduces FX layers.
If you earn in local African currencies → direct RMB payments may sometimes be cheaper.

Rule of thumb:
The fewer conversions, the lower your FX cost.

2) Supplier Preference

Many exporters overlook this.

A supplier quoting:

• USD price often includes FX protection
• RMB price may be more flexible and negotiable

Ask both:

“What is your best price in USD and in RMB?”

You’ll often see a meaningful difference.

3) Order Size

Small Orders

USD is usually simpler and safer.

Large Orders

RMB payments can unlock serious cost savings and better terms.

For high-volume exporters, even a 1–2% FX advantage compounds into significant savings annually.

4) Exchange Rate Timing

If the RMB is weakening against the USD:

→ Paying in RMB can be advantageous.

If the RMB is strengthening:

→ USD payments may protect your margins.

Smart exporters monitor FX trends before large payments.

5) Speed & Payment Reliability

Delayed payments can disrupt supply chains.

Choose the currency that:

• Clears faster
• Faces fewer compliance issues
• Is easier to track

Modern fintech solutions now outperform traditional banks here.

How Yogupay Helps Exporters Pay China Efficiently

Cross-border payments to China can be slow and expensive through banks. This is where specialized platforms like Yogupay help.

1) Multi-Currency Support

Yogupay allows businesses to:

• Hold multiple currencies
• Convert at competitive FX rates
• Pay suppliers in their preferred currency

This flexibility helps traders choose USD or RMB strategically.

2) Lower FX Costs

Traditional banks often hide fees in poor exchange rates.

Yogupay offers:

• Transparent pricing
• Competitive FX spreads
• No surprise deductions

For exporters sending frequent payments, this leads to real savings.

3) Faster Settlement

Speed matters in trade.

Yogupay helps businesses:

• Send funds quickly
• Reduce delays
• Improve supplier trust

Reliable payments strengthen supplier relationships and negotiation power.

4) Simplified Compliance

China’s payment regulations can be complex.

Yogupay helps streamline cross-border compliance so businesses can focus on trade, not paperwork.

FX Risk: Who Bears It and How to Manage It

Every cross-currency trade transaction involves foreign exchange risk. The question is simply who holds that risk and how it is managed.

When You Pay in USD

If your supplier is in China and you pay in USD, the exporter must convert those dollars to RMB to pay their workers, suppliers, and taxes. They bear the FX risk if the dollar weakens against the RMB after they’ve quoted you a price; their effective RMB revenue shrinks. This is why many sophisticated Chinese exporters build a currency hedge cost (or a margin buffer) into their USD pricing.

When You Pay in RMB

When you pay in CNH, you, as the importer, assume the FX risk. You now need to convert your home currency into CNH at whatever rate prevails on the settlement date. Your core tools for managing this are:

• Forward Contracts — CNH Forward Contracts: Lock in a CNH/USD (or CNH/EUR, etc.) rate today for settlement 30, 60, or 90 days forward. Available through most major banks with China trade desks.
• Options — FX Options: Purchase the right but not the obligation to buy CNH at a set rate. Provides downside protection while preserving upside if the CNH weakens.
• Natural Hedging — Natural Hedging: If you also sell goods into China and receive RMB revenue, you can match your payables in CNH against your receivables in CNH, eliminating net FX exposure.

Note that the CNH forward market, while growing, is less liquid than the USD forward market. Hedging costs (the bid-ask spread) are higher, and longer-dated hedges (beyond 12 months) can be difficult or expensive to execute.

The Geopolitical Dimension

No discussion of USD vs. RMB for China trade is complete without acknowledging the macro geopolitical context. The U.S. dollar’s dominance in global trade is both a commercial convenience and a geopolitical instrument. U.S. sanctions, secondary sanctions, and correspondent banking pressure have increasingly affected legitimate trade flows, not just sanctioned entities.

China’s push to internationalize the RMB is, in part, a strategic response to dollar hegemony. CIPS, bilateral RMB swap lines with central banks in over 40 countries, and the Digital Yuan (e-CNY) are all pieces of an infrastructure designed to offer an alternative to the dollar-denominated SWIFT system.

For most Western importers, this geopolitical dimension remains background noise. But for buyers in jurisdictions with strained U.S. relations, or companies that are themselves subject to U.S. compliance scrutiny, the RMB settlement pathway deserves serious evaluation as a risk management tool, not just a cost optimization exercise.

Here is a simple decision framework to guide your currency choice:

Choose USD if: you value simplicity and universal acceptance above all else; your supplier relationships are transactional and not deeply negotiated; you already have USD-denominated trade finance infrastructure; your volumes are low, and FX hedging complexity is not warranted.

Choose RMB (CNH) if: you have a high-volume, strategic relationship with one or more Chinese suppliers; you believe you can negotiate a meaningful pricing discount; you face USD correspondent banking friction; your organization has the treasury infrastructure to manage CNH exposure; or you operate in a jurisdiction where dollar-system risk is a material concern.

Consider a dual-currency approach if: you source from a mix of suppliers across different sectors; some relationships justify RMB negotiation while others do not; you want to pilot RMB settlement with a subset of suppliers before committing fully.

The currency you pay in is not a passive administrative decision; it is a lever for cost reduction, relationship management, and risk mitigation. When approached strategically, the right currency choice can meaningfully reduce your total cost of sourcing from China.

Conclusion

Choosing between USD and RMB when paying Chinese suppliers isn’t just a currency decision; it’s a strategic choice that impacts costs, cash flow, and supplier relationships. By evaluating your revenue currency, order size, supplier preferences, and FX trends, you can minimize risk and maximize savings. Leveraging modern payment platforms like Yogupay makes it easier to pay in the currency that best suits your business, whether USD or RMB, while reducing fees, speeding up transactions, and improving overall trade efficiency.

Don’t leave your profits to chance. Start using Yogupay to simplify cross-border payments, choose the best currency for your orders, and keep more of your hard-earned revenue. Sign up now and experience faster, smarter, and more cost-effective payments to China.