What currency does China use? CNY vs CNH and RMB explained
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China’s official currency is the renminbi (RMB), and its main unit is the yuan (CNY). The key difference lies in how they’re regulated and traded:
- CNY, known as the onshore yuan, which is used within mainland China and regulated by the People’s Bank of China, and
- CNH, known as the offshore yuan, which is traded internationally with more flexible exchange rates
Both represent the same currency but circulate in different markets. While they might seem interchangeable, they serve different purposes in international trade and finance. Understanding the distinction between the two is essential, especially for businesses making payments to Chinese suppliers or managing currency exchange.
These variations can impact exchange rates and transaction costs, making it important to know which currency you’re dealing with and how it affects your business when working with companies in China.
In this article, we’ll cover:
- Why China needs two currencies
- The key differences between CNH and CNY
- What to know about the Chinese currency if you do business there
- Why use WorldFirst when doing business in China
Note: Are you looking to send money to China as a business? Open a free WorldFirst account to take advantage of competitive conversion rates and faster payments.
Why does China have two currencies?
Both CNY (Chinese yuan) and CNH (offshore yuan) are part of the Renminbi (RMB) — China’s official national currency.
It was first issued by the People’s Bank of China in 1948 and while the two terms are used interchangeably the relationship is similar to that of sterling and pound in the UK.
Back in the days before China was the industrial and economic behemoth that it is now, the Chinese economy was relatively closed and the conversion of international currency was heavily restricted. The Chinese government wanted to make sure that it held control of the money in the economy and to limit the amount of currency and wealth that could flow out of the country.
As China’s economy expanded, the People’s Bank of China (PBOC) introduced the offshore yuan (CNH) to facilitate global trade and investment.
Creating a parallel currency, settled in China-Hong Kong, was the way that they decided to set up the new currency and banks were able to start trading CNH from 2004.
CNY vs CNH: Key differences explained
The main differences between the two currencies are the regulations and restrictions imposed upon them and their use. Here are the key differences listed:
| Feature | CNY (Onshore Yuan) | CNH (Offshore Yuan) |
|---|---|---|
| Market | Mainland China | International (Hong Kong, Singapore, London, etc.) |
| Regulation | Controlled by the People’s Bank of China (PBOC) | Freely traded in global markets |
| Convertibility | Restricted | Fully convertible |
| Exchange Rate | Fixed daily by PBOC | Market-determined |
| Usage | Domestic trade and payments | Cross-border transactions |
| ISO Code | CNY | CNH |
This can lead to the value of the currencies diverging and, on any day of the week, an offshore yuan (CNH) can be valued by the markets as being worth more or less than one available on the Chinese mainland (CNY).
Typically the values will diverge depending on liquidity – in other words, how easily traders can get hold of a currency and the overall flows into the Chinese currency around Chinese New Year. Similarly, if the People’s Bank of China is to intervene in markets then it will use the CNH to do so.
To summarise:
- CNY is the ISO code for domestic currency traded only within Mainland China, and is sometimes referred to as onshore renminbi
- CNH is the code used for international Chinese currency which is traded outside of Mainland China, and is sometimes described as offshore renminbi
CNY is what Chinese residents use to cover everyday purchases and do business within China. As a foreign company, you would only use CNY for domestic transactions in China.
CNH is used for trading in international markets, including cities like Hong Kong, New York, London and Singapore. As a foreign company, you would use CNH for conducting transactions that involve China but are outside of Mainland China.
How the dual-currency system affects international business
CNY and CNH are closely linked, use the same banknotes and typically maintain a 1:1 exchange rate. The official ISO code for CNY is ISO 4217, designating it as the standard currency of China.
When making payments to China – such as settling invoices with suppliers – your funds will be converted into CNY. Conversely, when receiving payments from China, they will automatically be converted into CNH.
However, due to regulatory restrictions, sending money to China can be complex, time-consuming, and costly. Many banks don’t support direct CNY transactions, making it challenging for businesses to pay suppliers in the local currency. If you’re importing goods and need to transact in CNY, you typically require either:
- A CNY account with an international bank that supports renminbi transactions, or
- A CNH account, which allows you to receive and manage payments in offshore renminbi
This is where WorldFirst provides a solution. With WorldFirst, businesses can easily hold multiple currency accounts, convert funds at competitive rates, and send payments to China, where they’re automatically exchanged into CNY. This simplifies transactions, reduces costs, and ensures smooth payments to suppliers.
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 the only 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.
In summary:
- China’s currency is the Renminbi (RMB), represented by the yuan (CNY) domestically and CNH internationally
- The dual structure helps manage trade and capital flows
- For businesses, understanding these differences can reduce costs and simplify payments
Platforms like WorldFirst make these transactions seamless, secure, and cost-effective
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.
Frequently Asked Questions
1. What currency does China use?
China uses the renminbi (RMB) as its official currency. The yuan (CNY) is its main unit of account, often used interchangeably with RMB.
2. What’s the difference between CNY and CNH?
CNY is the onshore yuan used in mainland China under government regulation. CNH is the offshore version, traded freely in markets like Hong Kong, London and Singapore.
3. Why does China have two currencies?
China maintains two versions of its currency to manage capital flows – CNY for domestic use under strict controls and CNH for international trade with flexible exchange rates.
4. What does RMB mean in currency terms?
RMB stands for “renminbi,” meaning “People’s Currency” in Mandarin. CNY and CNH are both denominations of RMB used in different financial systems.
5. Which should I use when paying suppliers in China?
Businesses pay in CNY when sending funds from onshore bank accounts to suppliers in mainland China. CNH is used for offshore transactions and global trade settlements.
Lawrence Bennett is UK Country Manager at WorldFirst. He brings 15+ years of experience across fintech, ventures and e-commerce.
Lawrence Bennett
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