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CNY vs CNH: Why are there two types of Renminbi

Last update: October 28, 2024

Contents

Here’s a quick guide on the differences between CNY and CNH.

Key takeaways

CNY and CNH are two types of Renminbi that represent onshore and offshore versions of Yuan
CNH is traded freely in the global currency markets; the Chinese government controls CNY
When exchanging CNH for CNY or vice versa, the exchange rate is always 1:1

Introduction

RMB, CNH, and CNY are all used when discussing China’s currency. Do they all mean the same thing?

Well, not exactly.

RMB is China’s official currency. CNY is the Chinese Yuan used in the onshore market and CNH is the Chinese Yuan used in the offshore markets.

Sounds confusing? It can be.

Take a look at our quick guide on CNY vs CNH, where we break down the main differences between the two. We also discuss how you can save costs when making payments into mainland China.

What is Renminbi (RMB) and Yuan?

Renminbi (RMB) means the people’s money. It is the official name of the currency issued by the People’s Bank of China in 1948.

The new currency allowed the government to unify the Chinese economy, which had previously been divided into different regional currencies.

Yuan is the unit of the Renminbi currency. It is similar to how Pound Sterling is the official currency of the UK, but the currency unit is referred to as Pound.

The symbol ¥ represents the Yuan.

CNY and CNH are two types of Renminbi that represent onshore and offshore versions of Yuan.

Since China’s capital and forex markets are controlled and not completely open, the Chinese Yuan has different features in the onshore and offshore markets. This is also why Yuan has two symbols distinguishing between onshore and offshore.

What is CNY?

CNY is the ISO code for the onshore Chinese Yuan, which differentiates it from the offshore Yuan. It is also sometimes referred to as the Chinese Yuan onshore or onshore Renminbi. All transactions in mainland China are done through CNY.

What is CNH?

CNH is the Chinese Yuan used in offshore markets outside of mainland China.

CNH was launched in 2010 when China’s Central Bank and Hong Kong Monetary Authority signed a clearing agreement on the Chinese Yuan. It is controlled by the free markets, which determine its value.

What are the differences between CNY and CNH?

	CNY	CNH
Trading location	Onshore – mainland China	Offshore – Outside of mainland China (Australia, Singapore, Hong Kong)
Controlled by	Government of China	Controlled by the free market
Primary use	Domestic transactions within mainland China	International transactions and investments
Exchange requirement	Foreign businesses need to exchange CNY for CNH for offshore use	No exchange is needed for offshore use
Currency trading	There are restrictions on currency trading	Can be traded with other currencies

What is the exchange rate between CNY and CNH

When exchanging from CNH to CNY, the exchange rate is always the same – 1:1. They are worth the same amount.

However, when converting CNH or CNY to a foreign currency like AUD or HKD, the two types of Yuan can have different exchange rates. That’s because while CNY is controlled by the Chinese government, which restricts currency trading, CNH can be traded freely.

It’s important to note that foreign businesses can accept CNY, but if they want to use Yuan outside of China, they have to convert CNY into CNH first.

Why does China have two currencies?

Before China became the industrial and manufacturing leader of the world, its economy was considerably closed and the conversion of international currency was restricted. The Chinese government limited the money and wealth that could flow out of the country.

However, as the manufacturing industry boomed, more money started coming into the country, which led to the Chinese government establishing a new parallel currency.

CNY is controlled by the People’s Bank of China (PBOC) to maintain export competitiveness and economic stability. On the other hand, CNH is traded in the international market and its value is determined by market forces.

A two-currency system allows China to have a stable domestic currency while promoting international trade.

Benefits of trading in CNH

Here are some of the benefits of trading CNH for international businesses

Improves price transparency for Chinese suppliers

Because CNH can be traded like other international currencies, you can make international payments to suppliers in China using their home currency. Paying your Chinese suppliers in CNH also means they can provide a quote in their home currency without considering currency fluctuation. As a result, the quotation could be more favourable for you. You can avoid renegotiation of purchase prices and build more scope for price negotiations.

Suppliers won’t be required to add an exchange rate buffer within their price, which in turn gives you access to a larger pool of suppliers in China.

Manage currency risk through hedging

CNH can be traded as a deliverable forward currency. Purchasers who manage currency risk by hedging with FX forwards could benefit from better forward point gains with CNH when compared to equivalent USD transactions.

Sending money to China? WorldFirst can help

As a business buying from China, you could also make significant savings by paying directly in CNH compared to first exchanging in another currency like USD. You can use a World Account to pay suppliers in China locally in CNH.

Disclaimer: The information contained is general only and largely our views. Before acting on the information you should consider whether it is appropriate for you, in light of your objectives, financial situation or needs. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions, estimates, mentioned products/services and referenced material constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. WorldFirst shall not be responsible for any losses or damages arising from your reliance of such information.

Rick Hill has worked in payments and financial services for the past nine years. He began his career at a large institutional bank and has since worked across startups and scaleups. Over the past four years, his experience with e-commerce retailers has led him to believe that WorldFirst will be crucial in helping brands expand globally by demystifying the complexities of entering new markets.

Rick Hill

Author

Head of Sales ANZ at WorldFirst

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CNY vs CNH: Why are there two types of Renminbi

What is Renminbi (RMB) and Yuan?

What is CNY?

What is CNH?

What are the differences between CNY and CNH?

What is the exchange rate between CNY and CNH

Why does China have two currencies?

Benefits of trading in CNH

Sending money to China? WorldFirst can help

Continue reading

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CommBank business bank account review: Features, fees & more

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The simpler way to pay and get paid

Multi-currency accounts, competitive FX, and global transfers — Everything you need to pay and get paid internationally

Who We Are >

Named a Top Global Fintech Company by CNBC & Statista, we’ve supported 1.5M+ businesses since 2004.

CNY vs CNH: Why are there two types of Renminbi

What is Renminbi (RMB) and Yuan?

What is CNY?

What is CNH?

What are the differences between CNY and CNH?

What is the exchange rate between CNY and CNH

Why does China have two currencies?

Benefits of trading in CNH

Sending money to China? WorldFirst can help

Continue reading

Westpac business bank account review

The best foreign currency accounts in Australia

CommBank business bank account review: Features, fees & more

Mastercard foreign transaction fees explained

Revolut Business account review: Features, fees & more

How to import products from China to Australia

The simpler way to pay and get paid

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