Having a solid grasp on what currency to use when traveling to China can help ease the angst of preparing for a trip. It can be especially challenging for travelers from countries with strong currencies, as their money does not go nearly as far in China as it does domestically. Moreover, unfamiliarity with the Chinese currency can add to travelers confusion. To simplify the matter, read on for an explanation of the Chinese legal tender and the regulatory exchange rules.
The Chinese currency, or Renminbi (RMB) is the official legal tender of the People’s Republic of China. It is divided into 100 units called fen (分), and the most common denomination of paper money is the Yuan (元). Receipts and prices are usually written as XXXY.YY Yuan — XXX being the whole amount and YY the fraction in tenths (小数). The conversion rate between USD and RMB is relatively fixed at 6.71 RMB per USD, Euros and other major currencies, but it is subject to change!
The Chinese government currently permits travelers to convert and bring in foreign currency for exchange. There is no limit to the amount of foreign currency that can be exchanged, however, travelers should be aware of the rules of the State Administration of Foreign Exchange (SAFE). All income gained from abroad, including interest payments, must be declared at customs. Certain airports, such as Beijing Capital international airport, offer an on-site foreign exchange service which permits travelers to change USD or other currencies into RMB for their onward journey.
Travellers can also use banks at either the departure or the arrival airport however, this is generally more expensive than exchanging currency in the city. ATMs are also available in many cities and all major bank cards that accept international transactions such as Visa, MasterCard, American Express and Maestro, can be used. Bank cards can be used to withdraw RMB from Chinese bank accounts, however, withdrawals from an abroad bank account might incur additional fees.
Moreover, nowadays people tend to use mobile payment applications such as WeChat and Alipay, smartphones can be a convenient means of small-scale currency exchange. Both of these apps offer a different array of services and are accepted in many shops, restaurants, and hotels. To use these applications, travelers will have to install the associated app and register their credit card or bank account.
Demetalised currency
China’s currency is mostly a demetalised currency, which means that paper money and coins have taken the place of metal coins and precious metals as the legal tender. This decision was made as it was easier to transport in bulk, lower cost and simpler to manage. As a result, carrying Chinese coins, or any other coins at all, is not a common practice in China, not even among the older generations. Nonetheless, Chinese coins are still available and can be purchased as souvenirs or gifts.
The Chinese coin system uses the denomination “Jiao” (角) to specify the price. Coins come in two jiao (2角) denominations. One jiao is equal to 10 fen, and 10 jiao to one yuan. The whole yuan is then equivalent to 100 fen and is the currency denomination used in most transactions. Most coins are in the shapes of circles and each type of coin will have a hole in the middle of it including a different character on each side.
Major Banks in China
There are 4 major banks in China that offer foreign exchange services. They are the Bank of China (BOC), Industrial and Commercial Bank of China, Agricultural Bank of China, and Construction Bank of China. The BOC is the only one of the four to hold the title of central bank and is a state-owned banking institution. It provides a variety of services, such as foreign exchange transactions, currency exchanging, banking services, and investments.
All four offer Foreign Exchange Certificate (FEC) which are available in different currencies. These are often safest to use as they are more secure than physical cash and is accepted in most countries. FECs are accepted in most currency exchange booths as well as banks, and they can also be exchanged into physical currency with a minimal fee.
They offer cash advances or traveler’s cheque in China. This entails bringing in bank cards with sufficient funds to provide for the entire duration of the trip. This is the most expensive option, but it ensures the least amount of hassle with finding and exchanging currency. Take note banks and ATMs do not usually accept foreign cards. Moreover, bank drafts and wires sent from abroad take longer to process.
Currency Converter Apps
Currency converter apps can be a useful tool for travelers headed to China. They help to easily determine the value of a given amount of money in a foreign currency. This makes it easier for travelers to keep track of their funds and ensure that they are getting the best deal when exchanging currency. It is also important to to be careful about exchange rates and compare multiple sources. It is also advisable to not wait until the last minute to exchange currency as it can be costly
Currency conversion apps usually provide an updated list of exchange rates. A few apps have additional features such as a currency converter calculator and tax and bank fee information. It is important to be mindful of fees associated with the currency exchange as there are often fees of 2-3%. These apps can also help travelers to compare prices of goods and services in the local currency as well as other currencies.
Transactions Monitoring
Monitoring all the transactions in and out is crucial to make sure no unaccounted money is being used in the currency exchange. Reasonable amounts for single transactions will help to ensure all transactions comply with the regulations. Furthermore, travelers should differentiate between different types of transactions and split large amounts into smaller transactions. This makes the exchange rate more consistent and offers more options to travelers.
Single withdrawals and deposits should only be done within the same calendar day and should be kept separate from each other. This is to keep the exchange rate from fluctuating throughout the day and to reduce the amount transactions fees. Additionally, travelers should keep a record of all their transactions and exchange rates. This will help to track the total amount of money spent and received during the currency exchange process.
Saving Strategies
It is important to be cognisant of what currency to use and when to use it when traveling to China. Although exchanging currency in China can be convenient, travelers risk over-paying due to unfavorable exchange rates in certain locations. Thus, having a proper understanding of expected exchange rates and available options is essential. Additionally, travelers should be prepared to haggle in some locations, such as small stores or street markets, as this may help in getting lower rates.
Carrying currency may be beneficial, as travelers might get access to private currency exchange options. Exchange houses tend to offer better than average exchange rates, as their networks are catered to local needs and demands. And of course, foreign currency exchange still exists within the country. The larger cities tend to have more options, whereas the smaller towns have fewer options.
Lastly, travelers should consider avoid using their credit or debit cards when making purchases in China, as doing so will incur additional fees. Depending on the bank ATM’s, merchants may or may not charge additional fees for international credit card transactions. It is helpful to plan ahead for the most recommended method of payment and to conduct a bit of research when trying to figure out which currency and method of payment provides the best rate.
Forex policies
In recent years, the Chinese government has been increasingly strict with foreign exchange policies. While these rules can be complex, it is important to understand the regulations to avoid any penalties or fines. All foreign exchange activities must be reported to the Chinese government and travelers can only purchase foreign exchange up to 50,000 yuan in the form of cash or traveler’s cheques per calendar year. Any amount exceeding 50,000 yuan will require a Customs declaration before the exchange can take place.
Additionally, any leftover foreign banknotes must be exchanged at the foreign exchange counter when departing the country or purchasing a flight ticket. Unused Chinese currency can either be kept as souvenirs or exchanged during the period of declaration. Moreover, the foreign exchange control in China also applies to travelers coming from Hong Kong and Macao, as they have a separate foreign exchange system.
Knowing the currency exchange regulations is important when traveling to China as it will help to ensure that all transactions comply with the rules. Despite the complexity of the legal tender, having a basic understanding of the Chinese currency can help travelers to make more informed decisions when it comes to converting their money.
