CNY vs. CNH – Differences between the two Chinese Yuans

China’s currency plays an enormous role in global commerce. In 2023, the Yuan surpassed the Japanese yen to become the fourth most used currency in global settlements. The same year, it replaced the US dollar as the most traded currency in Russia.

Working with Chinese suppliers or selling to the Chinese market can help businesses skyrocket in profitability. To do so efficiently, eCommerce merchants and others should know some basic facts about China’s currency.

What’s crucial to understand is that “Yuan” (officially called the Renminbi or “people’s money”) actually refers to two different types of currency that are closely related. These are referred to using two different abbreviations: CNY and CNH. This article will explain what these are and any other information merchants might need to know about sending money to China. 

CNY and CNH: What’s the difference?

If you are exchanging Yuan online for a different currency, you may be confused because two different currency codes refer to Yuan. But there’s a clear distinction between the two types of Chinese Yuan:

What is CNY?

CNY stands for the Chinese Yuan Renminbi (RMB) and is the official currency used in mainland China. 

What is CNH?

CNH stands for Chinese Yuan Renminbi Offshore and refers to the Chinese Yuan traded in the offshore market, mainly in financial hubs like Hong Kong.

The key differences between CNY vs. CNH can be outlined as follows:

Can you convert CNH to CNY?

Yes, you can convert CNH to CNY, but not freely. Both represent the Chinese Yuan, yet CNY (onshore yuan) is traded within mainland China under strict regulation by the People’s Bank of China (PBoC), while CNH (offshore yuan) is traded internationally in markets such as Hong Kong, London, and Singapore. The two currencies are pegged 1:1, but their exchange rates may differ slightly due to separate trading environments and market forces. Businesses dealing with China often rely on banks or fintech platforms like Airwallex to handle CNH-to-CNY conversions at competitive FX rates.

What is the difference when trading CNY and CNH?

For people exchanging CNY for CNH, the exchange rate is always 1:1. The two types of Yuan are worth the same amount relative to each other. However, when exchanging CNY or CNH for a third currency, such as the Hong Kong Dollar, the two types of Yuan may be worth slightly different amounts, and this rate may fluctuate.

That’s because the Chinese government controls and regulates CNY, which puts restrictions on currency trading. It is the currency used within China. CNH is designed as an offshore version of the Yuan and can be freely traded. International companies can accept CNY; however, if they want to use Yuan outside of China, they need to exchange the CNY for CNH.

What does sending money in CNY to China mean for businesses?

When you send money to China with a currency conversion, you’ll most likely send it in CNY, but if you’re receiving money from China, it is more likely to be in CNH. For this reason, there might be a slight difference in the exchange rate when sending and receiving the Yuan. 

Businesses should also be aware of some restrictions and requirements when sending money to China. The Chinese State Administration of Foreign Exchange requires certain information on transactions involving the transfer of CNY to China to verify the origin of the funds. Banks in China also require order information.

Tips when importing from China and paying in CNY

International money transfer services in CNY can help businesses avoid the risks associated with fluctuating exchange rates between their home currency and the Chinese Yuan. This can lead to more predictable costs and financial planning, especially for long-term contracts or recurring payments. Not all banks can facilitate CNY transactions, so working with financial institutions experienced in international trade with China is essential.

Suppose you want to import goods from China and pay CNY. In that case, opening a CNY-denominated bank account with a bank that offers international services will be beneficial. This facilitates receiving and sending payments in CNY. You can also look into fintech platforms that specialise in cross-border transactions to streamline costs and improve efficiency in handling CNY.

How can Airwallex help businesses send money to China?

With an Airwallex Business Account, you can set up a multi-currency business account in moments and start sending and receiving CNY immediately. You’ll access all the perks of a digital business account, plus market-beating exchange rates and multi-currency virtual payment cards. 

Airwallex offers integrations with your preferred accounting software, including Xero, QuickBooks, and NetSuite. This means that your CNY transactions are logged automatically to your CNY account, so you can keep track of your revenue and expenses wherever you go.

If your team incurs company expenses or frequently travels to China (or elsewhere in the world), you can also issue multi-currency Visa Corporate Cards. These cards enable you to pay from existing balances, eliminating the fees commonly incurred with foreign currency exchanges.

Get started with Airwallex today to streamline your vendor payment process to Chinese suppliers and expand into the Chinese market. A product specialist can explain how an Airwallex Global Account can help you avoid the tedious conversion process between CNY and CNH. Get in touch today.

FAQs

What is the main difference between CNY and CNH?

There are several main differences between these two types of Renminbi or Yuan, including where they are used, how accessible they are to the market, and how they are regulated. These differences can be summarised as follows:

Regulation: The People’s Bank of China (PBoC) strictly regulates CNY, while CNH operates with less intervention.

Usage: CNY is primarily used within mainland China for domestic transactions, while CNH is used for international transactions and is accessible to global investors and businesses.

Market: CNY is traded within mainland China, whereas CNH is traded in offshore markets, such as Hong Kong, Singapore, and London.

Exchange rate determination: The PBoC manages CNYs, while market forces determine the value of CNU.

Convertibility: CNY is not freely convertible due to capital controls, while CNH is freely convertible in offshore markets.

Are RMB and CNY the same thing?

Yes, they both refer to Chinese currency, but they are used in different contexts.

RMB is short for “Renminbi,” which translates to “the people’s currency” in English. It refers to the currency as a whole, as “sterling” refers to British currency. It’s often used in formal and official contexts.

CNY stands for “Chinese Yuan.” The ISO currency code used in financial and trading contexts refers to the onshore version of the Chinese Yuan. It is typically used when referring to the currency in banking, financial transactions, and exchange rates. It is the equivalent of GBP (“Great British Pounds”) in British currency.

What is Renminbi (RMB)?

Renminbi (RMB) is the official currency of the People’s Republic of China. The word Renminbi means “people’s money” in Mandarin. Its primary unit of denomination is the Yuan (¥) — just as the US dollar uses “dollars” as units. In global finance, the terms Renminbi, Yuan, CNY, and CNH are often used interchangeably, but Renminbi is the currency’s formal name.

What’s the difference between Renminbi and Yuan?

The Renminbi (RMB) is the name of China’s currency system, while the Yuan (CNY) is the main unit of that currency — similar to how “sterling” refers to the British currency system, and “pound” refers to its unit. In everyday speech, people often say “Yuan” when discussing money amounts (for example, ¥100 Yuan), whereas Renminbi refers to the currency as a whole, including its policy and governance.

Disclaimer: This information doesn’t consider your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) it is important for you to read the Product Disclosure Statement (PDS) for the Direct Services, which is available here.