Vietnam–China Trade Settlement in CNY: The Legal Framework for Border Settlement and Through Banks of Both Countries

For Vietnam–China trade, settlement in renminbi (CNY) is no longer unusual: goods crossing border gates have a dedicated border-settlement channel, while ordinary trade flows through foreign-currency accounts at commercial banks in both countries. But CNY is a foreign currency within Vietnam foreign-exchange control framework — using the wrong channel can turn a routine payment into an FX-control violation. This article distinguishes the two settlement channels, how to open and account for a CNY account, and the restrictions on non-USD currencies in border trade.

Governing Instruments

Two lawful channels for CNY settlement

The first is border settlement — serving border trade between residents of the two countries border areas under the Vietnam–China border-trade agreement framework and State Bank of Vietnam rules on border-trade payment: transactions run through authorised banks in gate areas, and the settlement currency may be VND, CNY or a freely convertible currency as agreed within the border-trade regime conditions. The second is the ordinary commercial-bank channel: enterprises of both countries settle through the banking system (international remittance, collections, letters of credit) in CNY via the enterprise foreign-currency account at an authorised Vietnamese bank offering CNY services, connected to the CNY payment network of Chinese partner banks.

CNY within Vietnam foreign-exchange framework

Under Vietnamese FX law, CNY is a foreign currency like any other: international settlement in foreign currency for goods and services trade is lawful through authorised banks; but transactions on Vietnamese territory between residents must in principle be in VND — foreign currency may not be used as a domestic payment means outside statutory exceptions. A Vietnamese enterprise opens a CNY foreign-currency account at an authorised bank to receive export proceeds and pay for imports; converting CNY from export revenue or buying it from the bank requires valid underlying-transaction documents (contracts, customs declarations, invoices) under the current-account documentation regime.

Application Analysis

The CNY account and booking exchange differences

For accounting, a CNY account is a foreign-currency account: the enterprise records transactions at the actual rate on the transaction date and revalues foreign-currency monetary balances when preparing financial statements under the current enterprise accounting regime; realised and revaluation exchange differences are booked under the accounting rules for foreign-currency monetary items (through financial income/expense for most operating items). The important practice points: adopt one book-rate policy (the buying rate of the account-holding bank on the transaction date) in the internal finance rules, and reconcile the CNY account with the bank monthly — because CNY/VND moves more than USD/VND, small rate-application errors accumulate into material period-end differences. On tax: exchange differences relating to business operations enter taxable income/costs under current corporate tax rules.

Restrictions on non-USD currencies in border trade

Three restriction groups to check before choosing CNY as the border-settlement currency: (1) the subject and goods scope of the border-trade regime — not every enterprise and shipment qualifies as border trade; official-channel exports must use the ordinary bank channel with full customs documents. (2) The banking network: not every bank or branch at a gate has two-way CNY settlement capacity and corresponding limits; cash CNY payment is allowed only within border-regime limits — beyond that lie FX-control and AML risks. (3) The Chinese side: the Chinese partner cross-border CNY settlement runs through the CNY payment system and Chinese FX administration — the underlying-transaction files (contracts, Chinese customs declarations) must match on both sides, or the funds are held at the Chinese bank compliance stage even though the Vietnamese side has completed everything.

Recommended Actions

Classify each goods flow as border-trade or ordinary-trade channel before agreeing CNY payment terms.
Choose a bank with two-way CNY capacity; open the CNY foreign-currency account and agree the underlying-document confirmation process.
Adopt a book-rate policy and a monthly CNY-account reconciliation process in the finance rules.
Synchronise underlying documents on both sides (contracts, both countries declarations) to avoid funds held at Chinese-bank compliance.
Check cash limits and regime conditions at each specific gate before applying border settlement.

Frequently Asked Questions

Through which channels may Vietnam–China trade lawfully be settled in CNY?

Two lawful channels: (1) border settlement serving border trade in gate areas under the two countries border-trade framework and State Bank of Vietnam rules, through authorised border banks; and (2) the ordinary commercial-bank channel for official trade — the enterprise settles CNY through a foreign-currency account at an authorised Vietnamese bank connected to the Chinese side CNY payment system.

How does border settlement in CNY differ from settlement through commercial banks of both countries?

Border settlement attaches to the border-trade regime: the subjects are residents/traders of border areas, the goods qualify as border trade, settlement points are banks in gate areas, and specific limits apply (including cash limits). Commercial-bank settlement is an ordinary international transaction: any enterprise opens a CNY foreign-currency account and settles against full trade documents (contracts, declarations, invoices) by remittance, collection or L/C, without gate-area limits.

How does an enterprise open a CNY account and book exchange differences?

The enterprise opens a CNY foreign-currency account at an authorised bank offering CNY services; transactions are recorded at the actual rate on the transaction date, and foreign-currency balances are revalued when financial statements are prepared under the current accounting regime; realised and revaluation differences are booked through financial income/expense under the rules for foreign-currency monetary items, and enter taxable income/costs for corporate tax under tax rules. Adopt one book-rate policy and reconcile the account monthly.

What restrictions and conditions apply to non-USD foreign currencies in border trade?

The main restrictions: only qualifying subjects and goods may use the border channel (official exports use the ordinary bank channel); CNY settlement capacity of banks at gates is uneven; cash CNY payment is confined to the border regime and carries high compliance risk; and the Chinese side requires matching underlying files — mismatched documents leave funds held at the Chinese bank control stage.