China Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in china, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Trade Financing
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Methods of Payment

Companies report challenges and delays in obtaining approvals for foreign currency transactions by sub-national regulatory branches. Chinese authorities instituted strict capital control measures in 2016, when China recorded a surge in capital flight.  China has since announced that it would gradually reduce those controls, but market analysts expect they would be re-imposed if capital outflows accelerate again. Chinese foreign exchange rules cap the maximum amount of RMB individuals are allowed to convert into other currencies at approximately USD 50,000 each year and restrict them from directly transferring RMB abroad without prior approval from the State Administration of Foreign Exchange (SAFE).  

The two most common methods to finance imports in China are letters of credit and documentary collections. No matter which method is used, the Chinese importer needs to apply for the foreign exchange amount for the trade transaction from SAFE. The International Trade Administration (ITA) Trade Finance Guide: A Quick Reference for U.S. Exporters thoroughly details methods of payment as well as export financing and credit insurance options. 

Letters of Credit

  • Most Chinese commercial banks have the authority to issue letters of credit (L/C) for both imports and exports. Foreign banks with branch or representative offices in China can also issue letters of credit.
  • As a member of the International Chamber of Commerce since 1995, China is subject to the Uniform Customs and Practice (UCP) 600 code that governs letters of credit.

Documentary Collections

  • This method of payment is similar to a letter of credit, but less formal and more flexible. As with letters of credit, the exporter submits a full set of trade documents for payment collection to the bank designated in the contract.  The bank then sends the documents to the home office, which examines them and, in some cases, passes them to the buyer for further examination.   
  • Payment is made after the documents have met with the approval of all parties. This method of payment provides only limited coverage against default. It can be considerably less expensive than a letter of credit but should be used with caution.   
  • It is the responsibility of the exporter to determine the specific instructions to be used in the collection letter.   
    Electronic Payment Solutions

Electronic Payment Solutions

To enter the Chinese market, foreign business operators—especially small and medium-sized enterprises (SMEs) that want to sell through Chinese e-commerce platforms—usually need to open an account with a Chinese online payment system, such as Alipay or WeChat Pay.  

More information on financing is available on the China section of the U.S. Department of State Investment Climate Statements. 

U.S. Banks and Local Correspondent Banks 

Among the locally incorporated foreign banks in China, there are currently eight from the United States that operate about 80 branches and representative offices in China: 

  • Bank of America Merrill Lynch
  • BNY Mellon  
  • Citibank
  • East West Bank
  • JPMorgan Chase Bank  
  • Morgan Stanley Bank International  
  • State Street Bank and Trust Company  
  • Wells Fargo 

Export Credit Guarantees/Insurance 

To reduce financial risk and increase competitiveness, U.S. exporters may choose to explore credit guarantees/insurance options. Available programs will depend upon the type of export. Options include but are not limited to: