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Foreign Exchange for Expats in China

Submitted: August 2013

China’s official currency is the Chinese Yuan (CNY; Chinese: 元), which is also commonly referred to as “renminbi” (RMB; Chinese: 人民币). The People’s Bank of China (PBoC) is responsible for monetary policy.

Exchange rate regime

As the PBoC somewhat monitors the USD/CNY exchange rate, the Renminbi is fairly close to a managed floating exchange rate.

When China opened its economy in 1978, the Renminbi was frequently devalued in order to boost China’s competitiveness as an export-oriented economy. These devaluations took place from the early 1980s to 1994. Following the 1994 devaluation, the Renminbi remained strictly pegged to the US dollar, with the USD/CNY exchange rate set at 8.27.

In 2005, the US dollar peg was abandoned, and the Chinese Government announced that it would gradually allow the Renminbi to freely float. However, the 2008 financial crisis forced the PBoC to restore the peg until 2010.

Due to persistent upward pressure on the Renminbi, it has appreciated considerably since the peg was abandoned. In summer 2013, the USD/CNY exchange rate has returned to around 6.1.

Monetary policy

The PBoC may intervene to regulate the economy, be it to avoid overheating or to provide monetary stimulus. Reserve requirements and central bank interest rates may vary accordingly.

When the PBoC decides to tighten monetary policy, credit availability dries up, interest rates rise and inflation may go down.

Foreign exchange controls

Currency conversions involving Chinese yuans are centrally registered. Chinese citizens are allowed to convert up to $50,000 per year.

Other restrictions apply for foreign nationals. See Money Transfers for Expats in China.

Offshore renminbi

Chinese yuans (CNY) are traded only in mainland China. It is convertible to foreign currencies only in respect of current account transactions. You cannot transfer yuans overseas without converting them into another currency.

As China is gradually internationalising its currency, Chinese yuans are now being traded offshore on a freely floating basis. However, onshore and offshore yuans are separate currencies. Consequently, offshore yuans have a different currency symbol, and there may be a mismatch between the onshore and offshore exchange rates. In fact, there is a slight premium to pay if you wish to buy offshore yuans.


At close on 16 August 2013, the USD/CNY exchange rate was 6.1150 whereas the USD/CNH exchange rate was 6.1097.

The primary effect of this mismatch is that it encourages foreign companies to accept Chinese yuans as payment, so they can then exchange them at the more favourable USD/CNH rate. That said, the difference between the two exchange rates has been minimal so far.

The first offshore renminbi market (CNH) has been launched by the Hong Kong Monetary Authority (HKMA) on 19 July 2010, and they are available only in Hong Kong. Other offshore markets are being developed, such as the Taiwan-based offshore yuan (CNT). In practice, this should lead to new exchange rates, but they should be hardly any different from existing CNH exchange rates.

The internationalisation of the renminbi is very recent, and there are still few CNH-denominated capital investments available apart from the Hong Kong-based bond market. Additionally, offshore yuans (CNH) are still not fully convertible to onshore yuans (CNY) under China’s capital account, as foreign investment into China is regulated. See Money Transfers for Expats in China.



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