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 skyrocket profitability for business.

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 by the fact that there are two different currency codes that both 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:

What is the difference when trading CNY and CNH?

For people who are 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 CNY is controlled and regulated by the Chinese government, which puts restrictions in place for its 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 to CNH.

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

When you’re sending money to China with a currency conversion, it is most likely you’ll be sending them CNY, but if you’re receiving money from China, it is more likely to be in CNH. There might be a slight difference in the exchange rate when sending and receiving Yuan for this reason. If you’re looking to understand how to send money to China efficiently, our detailed article on China remittance is a must-read.. 

There are also some restrictions and requirements that businesses should be aware of when sending money to China. The Chinese State Administration of Foreign Exchange requires certain information on transactions that involve sending CNY to China, to prove where the funds came from. Banks in China also require order information.

Tips when importing from China and paying in CNY

1) Select financial institutions with expertise in international transactions

Businesses should choose financial institutions that specialize in international money transfers and trade with China. Using international money transfer services in CNY helps mitigate risks from fluctuating exchange rates, leading to more predictable costs and better financial planning for long-term contracts or recurring payments. However, not all banks can handle CNY transactions, making it essential to work with experienced institutions.

One effective option is the Airwallex Chinese Yuan account, which functions like a standard CNY business account. This allows secure remittances from Singapore to China, with an assigned account number for receiving, holding, and sending CNY directly to China-based partners. Additionally, Airwallex provides access to over 23 currencies, including CNY and USD, facilitating smooth transactions.

2) Explore fintech options that specialize in cross-border transactions

Airwallex is an end-to-end financial operations platform that helps businesses manage their cross-border payments. It offers more competitive foreign exchange rates and lower transfer fees than traditional banks. With Airwallex, you can make payments in 60+ currencies benefiting from market-leading FX rates. The platform facilitates payouts to 150+ countries and utilizes local payment systems in 120+ countries. By connecting to local networks like Alipay and WeChat Pay, your transfers can avoid the SWIFT network, reducing costly fees. As a result, nearly 50% of transactions are instant and most funds arrive within the same day.

3) Verify company licensing

In December 2023, the Monetary Authority of Singapore (MAS) mandated that remittance companies cease non-bank and non-card transfers to China, impacting services like mobile wallets and cash pickups. This directive aims to strengthen the financial corridor between Singapore and China and mitigate risks such as money laundering. By prioritising traditional banking and card-based transactions, the MAS aims to strengthen the financial transaction corridor between Singapore and China against potential risks like money laundering or illicit funding.

This new directive brings added complexity for individuals and businesses seeking to transfer funds from Singapore to China. While security remains paramount, limiting non-bank and non-card channels could significantly inconvenience those who previously relied on these methods for their speed, accessibility, and low cost. 

Singaporean businesses, in particular, may face challenges if they rely on instant, cost-effective remittance options to support their operations in China or settle payments with Chinese suppliers.

Fortunately, Airwallex has obtained the China Online Payment License, enhancing its access to the local market as a third-party payment provider within the country.

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 straight away. 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 such as Xero, Quickbooks and or Netsuite. This means that each of 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 has company expenses or travels frequently to China (or anywhere around the world), you can also issue multi-currency Visa Borderless Cards. This allows you to pay from already held balances, eliminating the fees normally incurred with foreign currency exchanges.

Get started with Airwallex today to streamline your vendor payment process to Chinese suppliers and start expanding 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. Sign up for an Airwallex account today

FAQs

1. 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 summarized as follows:

Regulation: CNY is strictly regulated by the People’s Bank of China (PBoC) 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: CNY’s is managed by the PBoC while the value of CNU is determined by market forces.

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

2. 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’s used to refer to the currency as a whole, as “sterling” is used to refer to British currency. It’s often used in formal and official contexts

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