CNY vs CNH vs RMB: Key Differences and Exchange Rates

Mainland China's economy is now the second largest in the world by GDP in 2024, with the gross domestic product (GDP) projected to reach about USD 21 trillion by 2026.

If you are looking to do business in China or are already engaged in business with them, you have likely encountered their currency, the “renminbi,” also known as the Chinese Yuan (¥). The renminbi is often referred to by the symbols CNY, CNH, and RMB. 

These multiple names have led to confusion for those making investments involving the Chinese currency or navigating China's foreign exchange policies. However, understanding the distinction is crucial as it affects how transactions are handled and how currency values may fluctuate.

This article explains the key differences between CNY, CNH, and RMB, along with guidance on the roles these currencies play in international trade.

Renminbi is the official name of Mainland China’s national currency, and it actually means “people’s currency” in Mandarin. 

Yuan is a unit of the renminbi currency, similar to what the "dollar" is to the US currency. Another analogy is to think of the Pound Sterling, which is the official currency of the United Kingdom and whose unit is referred to as Pound.

Yuan is the name by which many Chinese people call their currency. Additionally, the renminbi and Yuan are often used interchangeably. 

The symbol ¥ represents the renminbi or Yuan, with its international currency code (ISO code) being CNY. 

The renminbi is abbreviated as RMB and sometimes coded as CNH. 

Although RMB and CNH are not official ISO codes, some banks and financial institutions may treat them as such.

CNY and CNH are two types of the renminbi (RMB), representing the onshore and offshore versions of China's currency, respectively.

In short:

• CNY is the ISO code for the renminbi currency traded only within Mainland China, sometimes referred to as onshore renminbi (RMB) or Chinese Yuan onshore.
• CNH is a widely used code for the renminbi currency traded outside of Mainland China, sometimes referred to as offshore renminbi (RMB) or Chinese Yuan offshore.

In the past, the renminbi could only be traded within Mainland China. To internationalize its currency, China introduced an offshore version of the renminbi known as CNH.

As Mainland China is still not completely open to international foreign exchange and capital markets, both types of renminbi—CNY and CNH—coexist today.

Traditionally, China tightly controlled its currency and restricted international financial transactions, allowing RMB settlements only within Mainland China. 

Aiming for more global economic growth, Mainland China started a pilot program for settling trades in the renminbi and lifted restrictions on RMB trade settlements between China and Hong Kong in 2009. This marks the first time RMB settlements were allowed outside Mainland China. 

Since then, regulations have gradually relaxed, fostering the development of RMB markets offshore, alongside the onshore market in Mainland China where buying and selling restrictions remain.

The offshore RMB is denoted by the unofficial code CNH, where "H" actually stands for Hong Kong. 

This inherently led to the development of more than 30 offshore RMB markets worldwide.

Hong Kong remains the most active offshore market, but some others are growing fast: South Korea, Malaysia, Singapore, Australia, Brazil, the United Kingdom, the European Union, and Canada.

Understanding the differences between CNY and CNH is crucial for navigating international finance. These distinctions impact where and how the yuan is used, regulated, and traded. 

Below is a summary table outlining the key differences.

Let's explore some key aspects in detail.

CNY is primarily used within Mainland China's domestic economy, covering everyday purchases, salaries, and business transactions among Chinese companies. Foreign businesses operating within China also use CNY for domestic transactions.

Conversely, CNH is predominantly traded in international markets, including major financial centers like Hong Kong, Singapore, and New York. 

International businesses conducting transactions involving China outside of Mainland China also use CNH.

The People's Bank of China (PBOC) oversees CNY by establishing a trading band that restricts fluctuations in its exchange rate and ensures effective management of capital flows into and out of China. Additionally, the State Administration of Foreign Exchange (SAFE) establishes the rules and regulations that govern foreign exchange activities in China.

On the other hand, CNH (Chinese Yuan Offshore) isn't directly controlled but can be influenced by regulatory bodies depending on where it's traded. The Hong Kong Monetary Authority (HKMA) plays a crucial role in influencing the CNH market by appointing Primary Liquidity Providers (PLPs) to ensure smooth trading and liquidity. Additionally, they continue to enhance and promote the offshore yuan market.

The exchange rate of CNY is managed by the People's Bank of China (PBOC), China's central bank. Every morning at 9.15 am, the PBOC establishes a reference rate for CNY using a basket of currencies and allows CNY to fluctuate within a narrow band around this central rate. 

This band is currently 2% above or below the reference rate and is known as the daily trading band. The central bank may intervene in the market as needed to stabilize CNY's exchange rate. The State Administration of Foreign Exchange (SAFE) is a secondary regulator that can also impact the exchange rate of CNY.

In contrast, the exchange rate for CNH is determined by market forces and fluctuates freely based on supply and demand. 

There can be discrepancies between the exchange rates of CNH and CNY when compared to other foreign currencies.

For example:

Historically, CNH has generally been observed to be slightly weaker than CNY.

CNH can be traded freely against other currencies in the international exchange markets without any interference from Mainland China’s capital controls. In contrast, CNY is subject to buying and selling restrictions imposed by the Chinese government, and access to the CNY market is limited to residents of Mainland China.

Within China, CNH and CNY generally hold the same value, and the exchange rate is 1:1, meaning CNY1 = CNH 1.

Although the rate is 1:1, converting CNY to CNH might involve slightly higher fees due to potential currency controls on moving money out of China. It's always advisable to check any associated fees. 

If you're involved in business with China, whether it's importing from Chinese suppliers or accepting payments from Chinese customers, here's some important information to keep in mind.

When you send money to China, it will typically be converted into CNY, as that is the domestic currency used within Mainland China.

However, when you receive money from China, it could be in CNH, depending on the specifics of the transaction and your bank accounts. There might be a slight difference in the exchange rates between CNY and CNH when converted from other currencies, so it's advisable to check with your bank or money transfer service in advance.

Because the money movements coming in and out of China are highly regulated, sending money to China can be expensive and slow in some cases.  Additionally, the dual currency can also be confusing and impact the outcome of your remittance, depending on which rate is most favorable at the time.

Not all financial institutions handle CNY transactions, so selecting banks experienced in international trade with China is crucial. If you're importing goods and need to pay in CNY, consider opening a CNY-denominated account with a bank or financial institution that offers international services.

With a Statrys business account, you can hold various currencies and make seamless money transfers to and from China.

Statrys is a payment service provider that offers multi-currency business accounts with competitive exchange rates, tailored specifically for businesses incorporated in Hong Kong, Singapore, or the BVI.  

Statrys’ rates are always based on real-time mid-market rates, plus the FX fees can be as low as 0.15%, so you could save more.

You can also manage, send, and accept payments in a total of 11 major currencies. Here’s a summary of our services: