Are you sending money from USA to China? Want to get the most yuan for your dollars or receive most dollars in China? Not sure which provider is the best, cheapest or fastest? Should your funds be received in renminbi or dollars? YOU came to the right place! We will cover all most important topics:

1. Current state and key trends for sending money from USA to China
   
2. Yuan to dollar exchange rates and timing
   
3. Top money transfer providers
   
4. Receiving in renminbi or dollars
   
5. Finding fastest and cheapest vs. better and best money transmitters
   

Please note this post is specific to China. If you are looking for general knowledge of how to best send money, please review this SaveOnSend blog post first.

1. USA-to-China Money Transfer: current state and key trends

According to Pew Research, China is the world’s #2 destination for receiving money after India:

This position is due to Chinese status as #1 migrant group in the world with 35 million Chinese residing outside of China. Out of all countries from where money sent to China, USA is the largest source of remittances:

For money transferred from the USA, China is the 2nd largest destination after Mexico. There are around 4 million people of Chinese descent in the USA, with around half residing across California and New York states. 10+% live around New York City and another 5% around San Francisco.

And these numbers will continue growing. In 2013, migrants from China became #1 nationality among all arrivals, surpassing Mexico and India:

Among migrants groups, Chinese in the USA tend to be better educated with about an average income:

Chinese send money from the USA using digital channels (a provider’s website or mobile app) and via a cash agent. Transfers could be received either in renminbi or dollars.

Chinese senders in the USA are very unique vs. other main migrant groups in one peculiar way. Their use of informal remittance channels (aka, “hawala”) might be on par or higher than sending money via legal channels. While about 50% of remittances from the USA to Mexico are from “undocumented” consumers, most Chinese in the US are legal residents. So why do so many of them prefer a shady route instead of using licensed money transmitters? It is due to a combination of historical context, cultural characteristics, and current trends in China

• Cultural Revolution ended only around 40 years ago, so there is still a living memory and fear of losing everything. Trust is a big issue, and non-Chinese, even well-known companies are still perceived with great suspicion
• There has been a strong push by the Chinese government to fight corruption which creates a fearful environment. Some Chinese citizens are scared to admit that they receive funds from the USA. On the other hand, a local corrupt official could ask a family for a share of remittances from abroad
• There are limits on how much money could be sent annually, and the Chinese government has consolidated database of all incoming transactions
• Chinese must pay taxes on income from abroad. By not reporting income in the USA, a family in China might be threatened to go to jail
• There are ongoing and widespread scams related to sending-receiving money

In our discussions with residents of Chinese communities around NYC, we also heard that a) many of them seem to work without paying taxes, b) they also seem extremely secretive of their earnings, both for safety and reputation reasons, c) they perceive a real risk of a bank or remittance provider sharing their transfer information with authorities and/or crime syndicates in USA and China.

As a result, while being three times larger than the Philippines or Mexico‘s amount of received remittances, China is only #4 destination for Western Union.

If you are reading this and haven’t yet tried sending money to China via a legal channel, online or via a cash agent, you should definitely give it a shot. There are plenty of providers to choose from for sending both yuan and dollars. In the USA, there are strict privacy laws about sharing customer data. With your smartphone and bank account, you can set up money transfer in a few minutes without sharing your information directly with any person. Once you link your bank account, you might be surprised how easy is to send money online and how much you could save. This way, all your past transfers are available for your review any time, plus your future repeat transfers shall take less than a minute to complete since you don’t have to enter the same information again.

2. Yuan to dollar exchange rates and timing

Are you wondering if you shall wait for the renminbi to increase in value or for a dollar to fall? Trying to time the best exchange rate is unbelievably difficult if not impossible. If anybody gives you advice on this topic while not making millions trading on the same information, it might be a sign that you shouldn’t follow such a recommendation. Still not convinced? Look at the graph below for changes in the exchange rate of yuan to a dollar during the last five years – do you see any logic in the exchange rate’s short- or long-term movements? How can anyone safely predict where it goes next?

Timing the best exchange rate is also challenging due to the unpredictable nature of providers’ FX markup (the difference between a yuan-dollar exchange rate that providers get on the market vs. an exchange rate that you get from a provider). Not only each money transmitter applies a very different FX markup, it also makes daily changes to its FX markup to maximize profits. Some providers are even applying different FX markups for different sending-receiving methods. For example, for sending money from the USA to China, MoneyGram has different yuan-dollar exchange rates for sending a) online, b) via cash agent.

Look at the graph below – it seems that each provider has a very steady approach for FX markup. However, once in a while, you see significant fluctuations, up-or-down, so it is always prudent to compare across multiple providers each time before sending money:

In the above graph, Western Union was charging zero FX markup (and no fees) for a while in 2016. Ria Money Transfer was charging a high FX markup when initially entering this corridor in 2018, but then, in early 2019, began offering an exchange rate better than available on the interbank market. MoneyGram suddenly dropped prices in late 2019, but it won’t last either.

3. Top money transfer providers

Due to cumbersome regulations, only a few providers are serving the Chinese market. Transfast stopped transfers to China in January 2016, Vianex – December 2016. Other Fintech startups are not even trying to deal with China due to “regulatory constraints” as expressed by Azimo.

As you see in the above graph, Western Union and MoneyGram used to apply almost no FX markup, but not anymore. Western Union is also by far the world’s largest money transmitter and the top provider of remittances from the USA to China. Among all providers, Western Union has the most pick-up location in China.

MoneyGram, the world’s 2nd largest remittance provider is also actively offering its services both via digital channels and cash agents. Another company to consider is TransferWise – it is the largest and fastest-growing cross-border money transfer startup. Other active providers include digital-only players like Xoom and WorldRemit – consumers can only use them by sending money via a linked bank account or with a debit card.

4. Receiving in renminbi vs. dollars

Review the two tables below that compare margins across providers. They are for sending the same amount, $1,000, from a linked bank account in the USA to a bank account in China, the first table is for receiving renminbi, second is for dollars:

As you could see, it is hard to decide which option is better because a) not all providers offer both options, b) the cheapest options are not always the fastest. If you try a money transfer comparison application like Monito for other send-receive options, you will notice a similar inconsistency. Therefore, don’t worry about whether to send USD or RMB – just choose whichever currency your receiving party prefers the most.

5. Finding fastest and cheapest vs. better and best money transmitters

So how do we find the best provider for sending money from the USA to China? There is no single provider which is “best” for all of us since we have our unique preferences among cost, speed, convenience, and customer service – no one provider clearly leads among all these factors.

However, there is one simple rule. Sending cash is usually 2-3 times more expensive than when transferring money digitally. The extra cost covers agents, real estate, compliance, cash handling. Receiving money in China into a bank account or via cash pick-up doesn’t make such a big difference, so choose the option that is most convenient for you.

To summarize, here are the leaders among providers that send money from USA to China:

• Fastest: Xoom
• Cheapest:
  1. renminbi: Xoom
  2. dollars: Walmart
• Availability of cash pick-up locations: Western Union, MoneyGram

After you send money, please describe your experience at the end of this blog, so others could learn from you.

Conclusion

Hopefully, you found this overview helpful and feel more confident in how to find the best approach for YOU when sending money from USA to China. If we missed anything, please leave a comment.

We will be keeping this post regularly updated, so come back soon!