CNH vs CNY: The Differences in Chinese Renminbi
It’s come as no surprise that China has overtaken the U.S. as the largest retail market in the world. The economic powerhouse continues to go from strength to strength, meaning that breaking into that market presents a huge opportunity for businesses in Singapore.
But before you start doing business in China, you’ll need to familiarise yourself with both of China’s currencies. Yes, both. While the Chinese have one official currency, the Renminbi (RMB), this is divided into two categories, both of which are known as Yuan.
This is understandably confusing for first-timers, and poses the question: which one do I use for my business in Singapore? Let’s dive into Chinese money, commonly associated terms, and what it all really means.
A quick look at Chinese Renminbi
Much like how Singapore has the Singapore Dollar, China has the Renminbi. Renminbi, which translates to ‘the people’s money’, is the official name of the currency of the People’s Republic of China. Renminbi is abbreviated as RMB, and is the most commonly used term to describe Chinese currency.
While Renminbi is the official name of the currency, yuan is the unit of currency. Think of it like this; England’s official currency is called Pound Sterling but the unit is called a Pound. The symbol for Yuan is ¥, same as the Japanese Yen.
Makes sense so far, right? There’s another wrinkle. There are two types of Yuan: CNY and CNH.
CNH vs. CNY
There are two types of RMB currency. Each covers a different major trading market:
CNY. CNY is RMB currency that’s traded on mainland China
CNH. CNH is RMB currency that’s traded offshore from mainland China, such as in Singapore
What are the differences between CNY and CNH?
While both CNY and CNH are currencies for the same country and are worth the same amount of Renminbi—they’re not technically the same currency. Both the CNY currency and CNH currency have different exchange rates and are traded at different amounts.
And, as they have different exchange rates, they’re worth different amounts—but not against each other.
In China, you’re simply dealing with Chinese RMB. It’s all the same RMB, whether it’s CNY or CNH. Exchanging the two works at a 1:1 exchange rate.
Only when the RMB is subject to external factors do the differences in RMB exchange rate become apparent.
Why are CNY and CNH exchange rates different?
CNY is government-controlled, designed to enable greater charge over its domestic currency and empowering trade between Chinese companies.
Foreign businesses (including those in Singapore) who trade within mainland China can still accept CNY as payment, but if they want to use RMB offshore, they’ll need to exchange CNY to CNH.
CNH, on the other hand, is designed as an offshore version of RMB. This way, RMB can be freely traded. It is essentially controlled by free market forces, which determines its value while still ensuring China’s internal RMB remains strong.
So, is RMB the same as CNY?
RMB and CNY are essentially the same thing.
Think of it this way. You buy a latte from a cafe in Singapore, which costs you $4.50. You hand over $5, and get 50¢ change. You’re giving and receiving dollars and cents —but it’s all still the Singapore Dollar.
The relationship between RMB and yuan is the same. In these terms there’s essentially no difference: Chinese Renminbi is the official currency, yuan is the unit for the Chinese RMB.
What does this mean for businesses that want to send money to China?
If you’re looking to send money from Singapore to China, you need to be aware of the currency you’re operating in. You’re dealing with RMB for sure, and you can send money in CNY. But if you receive money from a Chinese business, it’s most likely to be in CNH. That’s why it’s important to note the exchange rate difference between CNY and CNH in your dealings.
Also, do be aware of restrictions and requirements on international money transfers to ensure a smooth flow of funds. For example, order information is required by the Chinese State Administration of Foreign Exchange on inbound CNY transactions, to prove the source of the funds. Banks will need order information to record the funds to accounts.
An Airwallex Global Business Account is a better banking alternative
Airwallex makes digital business finance easy with our Foreign Currency Account.
You get all the benefits of a digital business account, but with added benefits and features that are built for a global scale.
You can set up a Foreign Currency Account in seconds, and start transacting straight away. Your Global Account lets you send, receive, and hold CNY. Safely store your funds in your Virtual Wallet, and hedge against currency fluctuations that can easily eat into your profit margins.
When you send CNY to your Chinese business contacts, you’re able to access our market-leading rates—interbank exchange rate, plus a simple 0.3% fee. You can even empower your team with multi-currency virtual payment cards, allowing them to continue your business in China, and around the world.
Syncing directly to Xero, each of your CNY transactions are logged automatically to your CNY account, meaning you can keep track of all your dealings wherever you go.
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