Why does China have two currencies? CNY vs CNH explained

China’s official currency is the renminbi (RMB), and its main unit is the yuan. If you’ve done any research into paying Chinese suppliers, though, you’ve probably run into two different codes for what looks like the same money: CNY and CNH. The difference comes down to where and how each one is regulated and traded:

• CNY, the onshore yuan, used within mainland China and regulated by the People’s Bank of China (PBOC)
• CNH, the offshore yuan, traded internationally with a market-driven exchange rate

Both represent the same underlying currency, but they circulate in different markets and can trade at different prices on the same day. Understanding the distinction matters if you’re paying Chinese suppliers or managing currency exposure to China, since it directly affects your exchange rate and transaction costs.

In this article, we cover why China maintains this dual structure, the practical differences between CNH and CNY, where the digital yuan fits in, and how WorldFirst can simplify payments if you do business with China.

Looking to send money to China as a business? Open a free WorldFirst account to take advantage of competitive conversion rates and faster payments.

Key takeaways

• CNY and CNH are both forms of the same currency, the renminbi, first issued by the People’s Bank of China in 1948. The relationship is similar to sterling and the pound in the UK.
• CNY is the tightly controlled onshore yuan, traded only within mainland China at a rate the PBOC manages daily. CNH is the freely traded offshore yuan, used in hubs like Hong Kong, Singapore and London.
• The two rates can diverge, sometimes significantly, based on liquidity, capital flow pressures and PBOC intervention, so it pays to know which one you’re being quoted.
• The digital yuan (e-CNY) is not a third currency. It’s a digital form of the same RMB, issued by the PBOC, and remains focused mainly on domestic payments even as China expands its cross-border ambitions.
• Sending money to Chinese suppliers directly can be slow and costly through a traditional bank. A multi-currency account like WorldFirst’s World Account lets you hold, convert and send CNH without needing your own Chinese bank account.

Why does China have two currencies?

Both CNY and CNH are part of the renminbi (RMB), China’s official currency, first issued by the People’s Bank of China in 1948. Although the terms get used loosely, the relationship is similar to sterling and the pound in the UK: RMB is the name of the currency itself, while yuan is the unit you actually count in, and CNY and CNH are simply the codes that show where a given transaction settles.

Before China became the industrial and economic power it is today, its economy was relatively closed, and converting currency in or out of the country was heavily restricted. The government wanted to keep firm control over the money supply and limit how much currency and wealth could flow out of the country.

As China’s economy expanded, Beijing took a gradual approach to opening the currency up internationally rather than floating it freely all at once. The first step came in 2003 and 2004, when the People’s Bank of China began allowing banks in Hong Kong to offer RMB clearing services, letting the currency start circulating outside the mainland for the first time. The offshore market matured significantly in 2010, when the PBOC and the Hong Kong Monetary Authority signed an agreement letting participating banks in Hong Kong trade RMB directly with each other, rather than only through a single designated clearing bank. That change is generally seen as the point the CNH market, with its own market-driven exchange rate, properly took shape, and it has since expanded to other financial centres including Singapore and London.

CNY vs CNH: Key differences explained

The main differences between the two come down to the regulations and restrictions placed on each one:

Every trading morning, the PBOC publishes a midpoint fixing rate for the yuan against the US dollar, based on submissions from a panel of major banks, and CNY trades within a tightly managed band around that fix. CNH has no such band and simply moves with global supply and demand.

This can lead the two rates to diverge, and on any given day, the offshore yuan (CNH) can be worth more or less than the onshore rate (CNY). The gap typically widens or narrows depending on liquidity, how easily traders can access the currency, and capital flows around events like Chinese New Year. When the PBOC wants to intervene in currency markets, it typically does so through the CNH market rather than CNY.

To summarise:

• CNY is the code for the domestic currency, traded only within mainland China, and is sometimes called onshore renminbi. As a foreign company, you’d only use CNY for transactions conducted domestically within China.
• CNH is the code for the international version, traded outside mainland China in hubs including Hong Kong, Singapore and London, and is sometimes called offshore renminbi. As a foreign company, you’d use CNH for transactions involving China that are settled outside the mainland.

What about the digital yuan (e-CNY)?

You may also come across the digital yuan, or e-CNY, China’s central bank digital currency. It’s worth being clear that this isn’t a third version of China’s currency alongside CNY and CNH. The e-CNY is simply a digital form of the same renminbi, issued directly by the PBOC, intended mainly for domestic retail and wholesale payments rather than as a cross-border settlement tool.

The e-CNY has been in pilot since 2019, and by late November 2025 cumulative transactions had passed 16.7 trillion yuan, roughly $2.3 trillion. From 1 January 2026, the PBOC began letting commercial banks pay interest on verified e-CNY wallets, moving the digital yuan closer to functioning like a bank deposit rather than a pure payment tool, partly in an effort to compete with the dominance of Alipay and WeChat Pay in everyday Chinese payments. For now, the e-CNY remains a domestic project rather than something that changes how foreign businesses pay Chinese suppliers, though China has signalled ambitions to expand its cross-border use over time.

How the dual-currency system affects international business

CNY and CNH use the same banknotes and typically trade close to a 1:1 rate, though they can diverge under pressure, as covered above. When you make a payment to China, for example settling an invoice with a supplier, your funds are generally converted into CNY once they reach the mainland. When you receive a payment from China, it’s typically converted into CNH.

Because of regulatory restrictions, sending money to China directly can be complex, slow and costly. Many banks don’t support direct CNY transactions, which makes it genuinely difficult for businesses to pay suppliers in the local currency without friction. If you import goods and need to transact in CNY, you typically need either a CNY account with an international bank that supports renminbi, or a CNH account that lets you receive, hold and manage offshore renminbi and convert it when needed.

This is where a multi-currency account like WorldFirst’s World Account comes in. It lets you hold multiple currency balances, convert funds at competitive rates, and send payments to China, where they’re automatically converted into CNY on arrival. This removes a lot of the friction, cuts costs, and helps keep supplier payments running smoothly. It’s also worth understanding how China’s currency questions connect to your wider supply chain, so it’s worth reading our guides on the China export licence explained and UK customs charges from China if you’re new to importing.

China’s currency on the world stage

Despite Beijing’s efforts to internationalise the renminbi, its share of global payments remains modest. SWIFT’s RMB tracker for June 2026 showed the yuan accounting for under 3% of global payments by value, against roughly 51% for the US dollar, 22% for the euro and 7% for sterling. Alongside SWIFT, China has built its own settlement infrastructure, the Cross-Border Interbank Payment System (CIPS), which processed a record RMB 1.22 trillion (around $178.5 billion) in a single day in April 2026 and had 1,791 connected financial institutions by the end of the first quarter of 2026. CIPS still relies on SWIFT’s messaging network for a large share of its transactions, so the two systems remain complementary rather than true rivals for now, but the growth shows China’s currency infrastructure is expanding even as its global payment share stays comparatively small.

Why WorldFirst simplifies cross-border payments to China

WorldFirst’s World Account is a multi-currency account built to help your business grow beyond borders. WorldFirst isn’t a bank; in the UK it’s authorised by the Financial Conduct Authority as an Electronic Money Institution, and customer funds are safeguarded in line with regulatory requirements.

Since 2019, WorldFirst has been part of Ant Group, the Chinese company behind the Alipay platform, which serves more than 1.3 billion users worldwide. That relationship gives WorldFirst deep infrastructure and banking connections across China, which we pass on to our customers in a few practical ways:

Pay anyone in China within 24 hours. As part of Ant Group, WorldFirst has strong relationships with major banks across China. This means payments can typically reach any bank account in China within 24 hours. Traditional banks, by contrast, may take several days or even a week to process the same payment, which can put pressure on your supplier relationships and your ability to negotiate favourable terms.

Competitive foreign exchange rates. There are no ongoing fees for holding a World Account, and no weekend surcharges added to your exchange rate. You can also lock in a currency conversion rate for up to 24 months with a forward contract, giving you budgeting certainty on recurring payments to China.

Hold and pay in multiple currencies. With a World Account, you can hold 20+ currencies and make payments in 100+ currencies, including USD, GBP, EUR, JPY and CHF, alongside CNH. This gives you the flexibility to pay suppliers in their preferred currency while managing your FX costs from a single account, and to set up local currency accounts in markets like the UK, the US and Europe where you don’t have a local entity.

Direct integration with 1688.com, one of China’s largest B2B marketplaces. If you regularly source from China, you’ve likely come across 1688.com. With access to over 10 million suppliers across 1,700-plus subcategories, the sheer variety on the platform means businesses can often cut sourcing costs by up to 40% compared with other channels. WorldFirst is 1688.com’s official international payment partner, so you can pay suppliers directly from your World Account’s CNH balance through World Pay, in a few clicks, without needing a Chinese bank account or a third-party agent. Read more: how to source wholesale using 1688.com outside China.

In summary

• China’s currency is the renminbi (RMB), represented by the yuan and traded as CNY domestically and CNH internationally.
• The dual structure helps China manage trade and capital flows while gradually opening its currency to the rest of the world.
• The digital yuan (e-CNY) adds a digital payment rail rather than a third currency, and remains largely domestic in focus for now.
• Understanding the difference between CNY and CNH can meaningfully reduce costs and simplify payments for businesses working with Chinese suppliers.

Do you run an international business trading with China? Open a free World Account to hold, convert and send CNH more easily.

FAQs

1. What currency does China use?

China’s official currency is the renminbi (RMB). The yuan is its main unit of account, and the terms RMB and yuan are often used interchangeably.

2. What’s the difference between CNY and CNH?

CNY is the onshore yuan, used within mainland China and regulated by the People’s Bank of China. CNH is the offshore yuan, traded freely in markets including Hong Kong, London and Singapore.

3. Why does China have two currency codes instead of one?

China maintains this dual structure to manage capital flows while gradually internationalising its currency: CNY for tightly controlled domestic use, and CNH for international trade with a market-driven exchange rate.

4. What does RMB mean?

RMB stands for renminbi, meaning “the people’s currency” in Mandarin. CNY and CNH are both denominations of RMB, distinguished by where the transaction settles.

5. Is the digital yuan (e-CNY) a third Chinese currency?

No. The e-CNY is a digital form of the same renminbi, issued by the People’s Bank of China. It’s currently focused on domestic payments rather than replacing CNY or CNH for cross-border transactions.

6. Which one should I use when paying suppliers in China?

Businesses typically pay in CNY when sending funds from an onshore Chinese bank account to a mainland supplier. CNH is used for offshore transactions and international trade settlement, which is what most foreign businesses use when paying Chinese suppliers from abroad.