The Chinese government has unveiled nine proposed measures aimed at easing cross-border transactions, with the new rules scheduled to take effect at the start of next year. According to China’s State Administration of Foreign Exchange (SAFE), the measures are designed primarily to reduce businesses’ settlement and transaction costs.
The proposals would also expand the role of payment providers, allowing them to handle currency conversions and related payments for businesses involved in procurement and other foreign trade activities. Organizers of international sporting events would similarly gain greater flexibility to handle their own transactions.
Other provisions would allow banks to streamline documentation checks and settlement procedures for businesses with strong internal compliance systems, reducing administrative hurdles while maintaining regulatory oversight.
“China has a noble goal, but it should be cautious about simplifying documentation checks and settlements, even if companies have sound compliance records,” said Brian Riley, Co-Head of Payments at Javelin Strategy & Research. “Allowing China’s trade group to enter currency services in areas like procurement and integrated foreign trade could get tricky if companies view it as part of the overall picture.”
A Large Market for Cross-Border
Cross-border payments represent a market worth hundreds of trillions of dollars, while U.S.-China trade alone amounts to hundreds of billions annually. The proposed measures could have implications across a broad range of activities, from trade finance to B2B commerce and e-commerce.
Digital payment platforms are already widely used for domestic and international transactions in China, according to data from Thunes and Juniper Research. More than half of consumers in China surveyed said they send money overseas to pay for online purchases, while 44% said they transfer funds abroad to support family or friends. Respondents also pointed to high transaction costs and slow processing times as persistent challenges—issues the proposed rules aim to address.
Going It Alone
China is also developing an alternative infrastructure for international payments via mBridge, a cross-border payment platform built around central bank digital currencies, including the digital yuan. The initiative is part of Beijing’s broader effort to reduce its reliance on the U.S. dollar and the SWIFT network.
Still, even as China builds out its own payment infrastructure and loosens restrictions on cross-border transactions, the success of these efforts will depend on the willingness of international trading partners to participate.
“While China’s intent is good, there is a lot of trade friction, so they shouldn’t go it alone,” said Riley. “To be credible, it needs action from global organizations like the IMF and World Bank.”