China’s currency - the Renminbi - ranks as the fifth most popular global payment currency.¹
On top of this, China has the second largest GDP in current dollars, making it a key target market for international business.²
But if you’re looking to break into this market, then you need to understand the Renminbi, which actually refers to two different currencies: CNY and CNH.
This article explores the ins and outs of the Renminbi, Yuan, and the difference between CNH and CNY.
|When importing from China, and paying suppliers overseas it’s best to avoid paying them in USD. Use Wise Business and payout in CNY to forget about long transfer times and hefty fees.|
Before looking at the difference between CNY and CNH, let’s first take a look at Renminbi and Yuan.
Renminbi (RMB) is the official name given to the currency belonging to the People’s Republic of China.
The name is the equivalent of Pound Sterling or Australian Dollar, for example.
Yuan, however, is the name given to the unit of currency.
Another example makes this distinction clear: although the official name of the currency in North America is the “US Dollar”, in day-to-day life it’s simply referred to as a dollar.
This is the exact same with Renminbi and Yuan, respectively.
From here, there is another distinction to be made about Renminbi/Yuan.
There are two types of Renminbi - and, by implication, two types of Yuan. These are: CNY and CNH.
- CNY is the Chinese Yuan traded in the onshore market;
- CNH is the Chinese Yuan traded in the offshore market.
CNH and CNY are valued at the same amount in Renminbi, and both of them are currencies of the same country (China). This means that CNH exchanges to CNY at a ratio of 1:1.
Despite these similarities, CNY and CNH are not the same currency.
They are exchanged at different amounts, regulated by separate authorities, traded at different prices and have differing levels of restrictions.
Here’s a summary of the main differences between CNY vs CNH.
|People's Bank of China (PBOC) controls the reference rate, in which CNY can only fluctuate within a 2% range of the reference rate||Free floating exchange rate determined by the market|
|Regulated by the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE)||Regulated by the Hong Kong Monetary Authority|
|Restrictions exist for currency trading||Can be traded without restrictions|
|Only residents of Mainland China have access to the CNY market||Residents and non-residents of Hong Kong, as well as certain residents of Mainland China, have access to the CNH market³|
CNH is the type of Renminbi traded in the offshore market.
The offshore market simply refers to everywhere outside of mainland China.
Hong Kong is considered part of the offshore market and thus trades using CNH.
CNH is traded freely in currency markets across the globe and its price is determined by market forces.
CNY, on the other hand, is the type of Renminbi traded in the onshore market - in other words, within mainland China.
The reference rate for CNY is set daily and the price can only fluctuate within 2% of this value.³
|Pay employees or even other businesses from USD to CNY with Wise, and get the mid-market rate for your transfers. Learn more about CNY transfers on the link.|
Within China, CNH and CNY amount to the same value.
This means you can exchange CNY for CNH at a ratio of 1:1.
However, when converting CNH and CNY into a foreign currency, the exchange rate will be different for each one. You can always check the latest exchange rate for USD to CNY.
When importing goods from China, it’s important to be aware of what type of Renminbi you’re using - the difference between CNH vs CNY can cost you unnecessary money.
When you’re sending money to China with a currency conversion, it’s likely to be in CNY - but if you’re receiving money from China, then it’ll probably be in CNH.
Given this complex payments landscape, you need a provider that can give you the best exchange rate possible, such as Wise.
You can also find out the best time to exchange your money to CNY, using Wise’s exchange rate tracker - giving you live notifications about changes in the rate.
In fact, when sending money abroad with Wise, you could save up to 19x more compared to sending with Paypal.
- SWIFT - RMB tracker monthly reporting and statistics on Renminbi (RMB) (pdf.)
- International Monetary Fund - GDP, current prices
- Mizuho Financial Group - China's dual exchange rate system (CNY vs CNH)
All sources checked 28 December 2021
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
Business debit card use has increased to 42%. See the 7 best prepaid debit cards for small businesses ✔️ Costs ✔️ Feature ✔️ Limits ✔️ Fees. Learn more here!
This guide to business travel expenses will help you track and manage your costs during your next business trip. Find best practices here!
Square’s checking account for businesses is an extension of their popular POS system. Read more to learn about ✓ key features✓the debit card ✓ limits and fees ✓
Cash app personal account vs business account differences: 1) 2.75% fee on incoming payments 2) No instant deposit fee 3) Must report on…read more here.
To hire independent contractors abroad, ✔️Understand what an independent contract is ✔️ Find out the local labor laws ✔️ Learn more here!
How much does it cost to sell on Etsy? Besides the 6.5% commission of a sale's total. But, there are more fees to consider. Learn about them here.