What Currency Does China Use? Chinese Yuan, RMB, CNY and CNH Explained
- Last update:
If you’ve ever received an invoice from a Chinese supplier, paid for a software tool hosted in China, or tried to settle a contract through a platform like Alibaba or 1688.com, you’ve likely encountered terms like RMB, yuan, CNY, and CNH — sometimes in the same document. Understanding the Chinese currency system isn’t just an academic exercise. For freelancers in Pakistan and India working with Chinese clients, or small businesses sourcing products from Chinese marketplaces, getting this wrong can mean paying more in conversion fees, facing payment delays, or sending funds to the wrong account type entirely.
Key Takeaways
- China’s official currency is the renminbi (RMB), and the yuan (CNY) is its primary unit of account — the two terms are often used interchangeably but are technically distinct.
- CNY refers to the onshore yuan used within mainland China and regulated by the People’s Bank of China, while CNH is the offshore yuan traded freely in global markets like Hong Kong, Singapore, and London.
- CNY and CNH represent the same underlying currency but can trade at slightly different exchange rates due to differences in liquidity and market access.
- Freelancers and small businesses in Pakistan and India typically interact with CNH when receiving or sending payments internationally, even when dealing with Chinese counterparts.
- Multi-currency payment platforms can significantly reduce FX conversion costs and transfer delays when handling renminbi-denominated transactions across borders.
What Is the Chinese Currency?
China’s official currency is the renminbi (RMB) — literally “People’s Currency” in Mandarin. Issued by the People’s Bank of China (PBOC) since 1948,¹ it’s one of the most transacted currencies in global trade. The yuan is its base unit of value, and in most business contexts — invoices, contracts, marketplace listings — yuan and RMB are used as if they mean the same thing. They don’t, quite, but we’ll get to that.
What Is the Difference Between RMB and Yuan?
Think of it like sterling and pound. Sterling is the currency. Pound is the unit you quote, transfer, and spend. RMB names China’s currency system. Yuan is the denomination you actually work with.
When you see a payment request for “500 RMB,” that’s effectively the same as “500 yuan” — the ISO 4217 code being CNY.² The distinction starts to matter operationally when you look at where that currency is being used. Domestically, it’s CNY. Cross-border, it becomes CNH. Same underlying currency, different market, different regulatory environment, and sometimes a different rate.
CNY vs CNH: Why Does China Operate Two Currency Systems?
China maintains two distinct versions of its currency to manage how money flows in and out of its economy. CNY (onshore yuan) is used exclusively within mainland China and is subject to strict government controls on exchange and conversion. CNH (offshore yuan) was introduced in 2004 and is freely traded in international financial centers including Hong Kong, Singapore, London, and New York.³
The dual structure allows China to support global trade and attract foreign investment while retaining control over domestic monetary policy and capital flows. The People’s Bank of China can intervene in currency markets using CNH without directly affecting domestic liquidity.
While CNY and CNH use the same physical banknotes and generally maintain a near 1:1 exchange rate, their values can diverge — sometimes by a meaningful margin — depending on market sentiment, global liquidity conditions, and PBOC intervention.⁴ For businesses and freelancers transacting across borders, this divergence can directly affect how much you pay or receive when converting currencies.
How the CNY/CNH System Affects Freelancers and Small Businesses
For freelancers and small business owners in Pakistan and India who deal with Chinese companies, the CNY/CNH distinction has real financial consequences. When you receive payment from a Chinese client or platform, those funds typically pass through the offshore CNH system before being converted into your local currency — whether Pakistani rupees (PKR) or Indian rupees (INR). When you pay a Chinese supplier or vendor, the funds you send in USD or your local currency are generally converted into CNY upon arrival in mainland China.
This creates two practical challenges:
Exchange rate variability
Because CNH trades freely in global markets, the rate you get on any given day may differ from the onshore CNY rate — and both can move significantly against the USD, PKR, or INR.
Infrastructure gaps
Many standard bank accounts in Pakistan and India do not support direct CNY transactions, which means payments can be routed inefficiently, incurring higher fees or longer settlement times.⁵
A multi-currency account that supports CNH holdings and direct conversion can help reduce these costs and speed up settlement.
CNY vs CNH: Key Differences
| Feature | CNY (Onshore Yuan) | CNH (Offshore Yuan) |
|---|---|---|
| Full name | Renminbi – onshore yuan | Renminbi – offshore yuan |
| ISO code | CNY | CNH |
| Where traded | Mainland China only | Global markets (HK, SG, London, NY) |
| Regulated by | People's Bank of China (PBOC) | Open market with PBOC oversight |
| Exchange rate | PBOC-managed | Market-determined |
| Physical banknotes | Same as CNH | Same as CNY |
| Typical business use | Paying mainland Chinese suppliers | International trade settlements |
| Access for foreign companies | Requires onshore CNY account | Accessible via international banks |
| Rate vs counterpart | Reference benchmark | Can trade at premium or discount |
Features and availability may vary by region and are subject to change. Always verify current offerings directly with each provider before making a decision.
CNY and CNH are functionally the same currency in physical form but operate in separate financial systems.⁷ The rate difference between them — called the CNY-CNH spread — is monitored closely by traders and can signal shifts in market sentiment toward China’s economy.
Why WorldFirst simplifies cross-border payments to China
WorldFirst’s World Account is a multi-currency account that empowers your business to grow beyond borders.
Since 2019, we’ve been part of Ant Group, the Chinese company that operates the lifestyle platform Alipay. Since Alipay serves 1.3 billion users worldwide, we’re able to leverage one of the largest global commerce ecosystems in the world and enable users to make transfers in 100+ currencies.
Here are some of the key benefits of having a World Account:
Pay anyone in China within 24 hours
As part of Ant Group, WorldFirst has strong relationships with all major banks in China. This enables users to send payments to any bank in China within 24 hours.
Unlike traditional banks, which may take several days or even a week to process payments, With WorldFirst, businesses can send same-day or next-day payments in USD or CNH, ensuring faster supplier settlements and helping you secure better rates and more favorable terms.
Enjoy the best foreign exchange (FX) rates
There are no ongoing fees for holding an account, and no FX rate changes (such as at weekends). You can also lock in currency conversion rates for up to 24 months to maintain budgeting certainty.
Open and hold accounts in multiple currencies
With a World Account, you can create 20+ currency accounts and make payments in 100+ currencies, including USD, GBP, EUR, JPY, CHF and more. This gives you the flexibility to pay suppliers in their local currency while saving on FX fees.
Additionally, you can set up local currency accounts in regions where you don’t have a local entity, making it easier to manage payments across different marketplaces like the United Kingdom, the United States and Europe – all from a single account.
Enjoy a direct integration with one of China’s largest B2B marketplaces: 1688.com
If you regularly source products from China, you’re likely familiar with 1688.com – one of the country’s largest wholesale marketplaces. With access to over 50 industries, 1,700+ subcategories and millions of suppliers, the huge variety of products means businesses can cut sourcing costs by as much as 40%.
WorldFirst is one of the payment platform directly integrated with 1688.com, allowing you to pay suppliers instantly, with a few clicks. This gives you a competitive edge – helping you secure inventory faster and at competitive rates.
Do you operate an international company doing business with China? Try WorldFirst
Understanding the difference between CNY and CNH is crucial when dealing with Chinese suppliers. Many business bank accounts don’t support direct payments in CNY, which can complicate transactions. If you primarily import goods, using a business account that operates in CNH and allows automatic transfers in CNY can simplify payments.
Opening a WorldFirst account helps you reduce FX fees, speed up payments and strengthen your negotiating power – key factors in improving your profit margins.
FAQ
What currency does China use for international business?
China uses CNH — the offshore yuan — for cross-border trade and finance. It’s the freely tradeable form of the renminbi, accepted in major financial centres including Hong Kong, Singapore, and London. Most international payments involving Chinese counterparties pass through the CNH system rather than the domestically regulated CNY.
What does RMB stand for, and is it the same as yuan?
RMB stands for renminbi — “People’s Currency” in Mandarin. The yuan is the denomination within that currency system, equivalent to how the pound sits within sterling. On invoices and payment platforms they’re used interchangeably, but technically RMB names the currency and yuan names the unit.
How do I know whether to pay in CNY or CNH?
If your payment is going to a bank account in mainland China, it will be received as CNY. If it’s routed through an international platform or a non-mainland bank, it’s processed as CNH. When in doubt, ask your payment provider or check the beneficiary’s bank location.
Can freelancers in Pakistan or India hold a CNH account?
Yes — through international multi-currency platforms, you can hold CNH without a Chinese bank account or local entity. This is particularly practical for freelancers invoicing Chinese clients or paying for Chinese software subscriptions, where the cost of repeated conversions adds up quickly.
What does it typically cost to send money to China from Pakistan or India?
Standard SWIFT transfers carry fixed bank fees, potential intermediary charges, and an FX conversion markup that often isn’t disclosed clearly. Specialist platforms tend to offer tighter rates and lower fees, especially for regular senders. The key metric is the spread between the rate you’re offered and the mid-market rate — not the transfer fee alone.
Sources:
- https://www.pbc.gov.cn/en/3688229/3688335/index.html
- https://www.iso.org/iso-4217-currency-codes.html
- https://www.hkma.gov.hk/eng/key-functions/international-financial-centre/renminbi-business-in-hong-kong/
- https://www.bis.org/publ/work604.pdf
- https://www.sbp.org.pk/departments/fedd.htm
- https://www.worldfirst.com/multi-currency-account/
- https://www.pboc.gov.cn/en/3688229/3688260/index.html
- https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=21331
- https://www.worldfirst.com/fx-risk-management/
This article is intended for informational purposes only and does not constitute legal advice or professional advice. This article should not be regarded as constituting an offer or a solicitation to buy or sell any regulated or financial products or services. WorldFirst makes no representations or warranties regarding the accuracy, completeness, or applicability of the content, and readers are encouraged to consult with legal professionals or other professionals for advice tailored to their specific situation. WorldFirst does not guarantee the accuracy and completeness of this article and expressly disclaims any and all liability to any person in respect of the consequences of anything done or omitted to be done wholly or partly in reliance on this article.
Linna is a Senior Content Strategy Manager specializing in fintech, cross-border payments, and global ecommerce. With extensive experience in international B2B growth content, and global market expansion, she leads content initiatives that help businesses navigate cross-border trade, international payments, and digital commerce at scale.
Linna
Author
WorldFirst South Asia
Continue reading
Choose a product or service to find out more
