Digital Yuan Cross-Border Payments: What Importers Need to Know

Every time you pay a Chinese supplier, part of the money disappears into bank fees, exchange spreads and days of waiting while the transfer passes through intermediary banks. Central bank digital currencies promise to cut those costs and make transfers near-instant, and China is at the front of that shift. By the end of this guide you will understand what digital yuan cross-border payments are, where the UAE and Saudi Arabia fit in, and what you should actually use to pay suppliers now.

What a central bank digital currency is

A central bank digital currency (CBDC) is a digital token issued by a central bank. It is, in effect, a digital version of cash: its value is guaranteed by the central bank, not by a commercial bank or a private company. That makes it different from the balance in your bank account, which is a claim on your bank, and from cryptocurrencies such as Bitcoin or stablecoins such as USDT, which no central bank stands behind.

Many countries are developing digital currencies, and China is well positioned to lead with the digital yuan, known as e-CNY. The People's Bank of China has run e-CNY pilots in a growing number of cities since 2020, and residents and some foreign visitors can hold it in the official e-CNY wallet app.

Why CBDCs could change cross-border payments

Lower transaction costs

According to the World Bank, the global average cost of sending a retail remittance has been around 6.51% of the amount sent, and as high as 8.19% in Sub-Saharan Africa. Business wire transfers cost less in percentage terms, but a USD payment from a Gulf bank to a Chinese supplier still typically carries a sending fee, one or more intermediary bank charges, a receiving fee and an exchange spread. CBDCs can reduce the number of intermediaries and the chain of correspondent banks each payment has to pass through.

Near-instant settlement

Almost all current instant payment systems work only inside one country. A SWIFT transfer from Dubai or Riyadh to Shenzhen usually takes 1 to 5 working days, and longer if a bank asks compliance questions. The only way to make cross-border payments instant is to remove intermediaries and settle directly between central bank systems, which is what CBDC bridges are designed to do.

Infrastructure that scales

Because the digital yuan is digital by design, China can distribute it through payment platforms that already have hundreds of millions of users, such as Alipay and WeChat Pay wallets. That lets e-CNY build on established infrastructure instead of starting from zero, which is a large advantage over countries that must build new wallets and merchant networks.

China's cross-border digital currency projects

mBridge: the multi-CBDC bridge

The Multiple Central Bank Digital Currency Bridge (mBridge) connects central banks on a shared platform so they can settle cross-border payments in their own digital currencies. The Digital Currency Institute of the People's Bank of China and the Central Bank of the UAE joined the project alongside the Hong Kong Monetary Authority and the Bank of Thailand. The Saudi Central Bank joined as a full participant in 2024.

For Gulf traders this matters directly. In January 2024 the UAE central bank reported its first cross-border payment in digital dirham to China through mBridge, worth AED 50 million. The platform is still moving from pilot transactions towards wider commercial use, so it is not yet a channel an ordinary importer can choose at their bank counter. Follow announcements from your central bank and your bank for when it opens to business clients.

The project has also changed shape. In 2024 the Bank for International Settlements, which had led the early work, stepped back and left mBridge to the participating central banks. Development continues, but timelines for business access have not been published, so do not plan your payments around it for the next order cycle.

Blockchain-based Service Network

China's government-backed Blockchain-based Service Network (BSN) aims to provide shared infrastructure for blockchain applications, and its backers have set out plans for an ambitious digital currency network over five years. It is part of China's broader push to digitise trade and finance, described in our article on China and the digital transformation of traditional industries. Our business model canvas for fintech in Chinese trade shows how such services are built.

These projects sit alongside a steady growth in trade between China and the Gulf, covered in our article on bilateral trade between China and Arab countries. As more trade is invoiced in CNY, direct settlement between central banks becomes more attractive for both sides. Arab ministers also chaired sessions at the 2025 Annual Meeting of the New Champions.

How to pay Chinese suppliers today

Until CBDC bridges are open to business customers, you have four realistic options:

• Bank transfer in USD (T/T): the standard method. Expect a fixed sending fee plus intermediary charges, and 1 to 5 working days. Ask your bank to use the OUR charge code if you want the supplier to receive the full amount.
• Bank transfer in CNY: many Gulf banks can now send CNY, often settled through China's CIPS system. It can reduce exchange costs and is often welcomed by suppliers, since they avoid converting USD.
• Letter of credit: slower and more costly in bank fees, but protects both sides on large orders by linking payment to shipping documents.
• Trade assurance on B2B platforms: platform escrow for orders placed through sites such as Alibaba.com, useful for first orders with a new supplier.

Whatever method you use, the fraud risk is the same: a supplier or a fake supplier asking you to pay a different account. Our guide to safe payment strategies for Chinese suppliers explains how to spot and block these attempts.

USD or CNY: who carries the currency risk

The UAE dirham and the Saudi riyal are pegged to the US dollar, so paying in USD leaves you with no exchange risk on your side; the supplier carries the USD to CNY movement and usually builds a margin for it into the price. Paying in CNY shifts that risk to you. Between a 30% deposit and a 70% balance paid 45 to 60 days later, the CNY can move by 1% to 3% against the dollar; our analysis of Chinese monetary policy explains what drives such moves. On large orders, ask your bank about fixing the rate forward, or agree the CNY price only when you are ready to pay the balance.

How to prepare your business for digital payments

1. Ask your bank whether it can send CNY directly and what it charges compared with USD, including the exchange spread.
2. Compare your last 5 supplier payments: total fees, days to arrive and any amount deducted by intermediary banks.
3. Ask your main suppliers whether they accept CNY and whether they would offer a better price for it.
4. If you have a Chinese company or plan one, open a corporate account and business Alipay or WeChat Pay accounts, so you can receive and pay in CNY inside China.
5. Check whether your bank takes part in mBridge or other digital currency pilots, and ask to be told when business payments open.
6. Update your internal payment controls so any new channel still requires a verified bank account and a second approval.

Common mistakes with cross-border payments

• Paying suppliers in USDT or other crypto to save fees. China banned cryptocurrency trading in 2021, you have no recourse if the goods do not arrive, and it can create anti-money-laundering problems with your own bank.
• Treating e-CNY as a ready B2B tool; today it is mainly a domestic retail currency in China.
• Paying a personal account instead of the company account named on the supplier's business licence.
• Accepting a change of bank details by email or WeChat without a phone call to a number you already hold.
• Looking only at the bank fee and ignoring the exchange spread, which is often the larger cost.
• Sending the full order value upfront instead of a deposit, with the balance after inspection.

What to do next

This week, pull the bank statements for your last five payments to China and write down the real total cost of each, including fees, deductions and the exchange rate you received. Then ask your bank for a quote on the same payments in CNY. If you are setting up a company in China and need local accounts to pay and collect in CNY, HiGreenPanda arranges corporate bank account opening from Shenzhen and Shanghai.