If your business settles invoices in Chinese yuan, you have probably received two different quotes where they look like the same currency. A supplier in Shenzhen quotes one rate. Your Hong Kong bank quotes another. That discrepancy is not an error. It reflects the structural reality of a currency that trades in two separate markets, governed by two different sets of rules. For finance teams moving money into or out of mainland China, getting this wrong creates real margin leakage at every settlement.
CNY and CNH are both codes for the Chinese yuan, the official currency of the People's Republic of China issued by the People's Bank of China (PBoC). The final letter tells you where the trading happens. CNY refers to yuan traded onshore, within mainland China. CNH refers to yuan traded offshore, in markets outside the mainland such as Hong Kong, London, Singapore, and Taipei etc.
Hong Kong remains the largest and most liquid CNH trading center, a position cemented since the offshore RMB market expanded substantially following the 2010 HKMA-PBoC reforms that enabled full interbank CNH trading.
Why do two codes exist for the same currency? China maintains capital controls, and the onshore yuan is not freely convertible. The offshore yuan is created so that international participants could hold and trade the currency without China needing to fully open its domestic capital account. The result leads to one currency, but with two pricing systems and there is a persistent gap between them.
The most important difference is how each of these two rates being set in the market.
CNY operates under managed pricing
Each trading day, the PBoC publishes a daily reference rate known as the midpoint or fixing. Onshore banks can only quote CNY within a permitted band around that fixing, which has stood at plus or minus 2 percent since 20141. The PBoC also retains the ability to intervene directly in the onshore market at any time.
CNH moves with the market
CNH has no official fixing and no trading band to be applied. The rate moves freely with global supply and demand, shaped by macroeconomic data, US dollar strength, trade flows, and sentiment toward Chinese assets.
Two other practical differences matter for treasury teams. CNY trades during mainland banking hours only. CNH trades across global financial centers for almost 24 hours a day. Onshore access is also restricted to licensed institutions, while CNH is open to any qualified international counterparty.
Since CNY and CNH are set differently, they rarely sit at the exact same level. The gap between them is called the CNY-CNH spread, and it tells you something useful about market sentiment.
When CNH trades weaker than CNY, meaning more yuan per dollar in the offshore market, it typically signals depreciation expectations and capital outflow pressure. When CNH trades stronger, the opposite is true. Traders and treasury teams seek this spread as a real-time barometer of sentiment toward the currency.
For a business, the spread has a direct cost implication. If you invoice a supplier in CNH but your payment routes through an onshore CNY corridor, the actual rate you received depends on which market the payment clears through, but not on the rate that you were being quoted to. A spread of 0.5 percent on a 10 million CNY payment is indeed CNY 50,000 of avoidable cost. During periods of stress, the spread can widen sharply. Finance teams that settle in RMB without monitoring the spread might absorb that volatility without realizing it.
The CNY/CNH dual structure creates three concrete decisions to make for any business transacting in RMB.
Settlement corridor choice
Whether your payment clears through an onshore or offshore route will determine which rate to be applied. Cross-border RMB trade settlement programs, including those operating through Hong Kong, allow eligible businesses settling in CNH without entering the onshore market. The right corridor depends on your counterparty location, your banking relationships, and the prevailing spread at the time of settlement.
Repatriation
Moving funds from the Mainland China into offshore RMB sits under regulatory scrutiny and quota frameworks administered by the State Administration of Foreign Exchange (SAFE). The route you choose will affect timing, documentation requirements, and the rate you ultimately realize.
Hedging
CNH is freely tradable offshore, which makes it the more practical currency for international businesses to hedge. FX Forward contracts written against CNH would allow a finance team to lock in a known offshore rate in advance for a future date, removing the uncertainty of spread movement before settlement arrives.
KVB Global's Virtual Account helps you to hold offshore RMB natively, without converting back to your functional currency between transactions. When CNH receivables come in from cross-border trade settlement, they will sit in your Global Account in CNH. When a CNH-denominated supplier invoice is due, you will pay it directly from that same balance. No intermediate conversion. No double spread cost.
For businesses operating across multiple currencies alongside CNH, the same account structure applies. Our Global Accounts support 40+ currencies, so your treasury team can manage RMB alongside USD, EUR, GBP, and other trading currencies from a single platform rather than juggling separate accounts across different providers.
Get in touch with us today to find out how a Global Account can simplify your RMB settlement process and reduce unnecessary conversion costs across your China payment corridors. Get in touch with our team to get started.
Is CNY the same as CNH?
No. Both represent the Chinese yuan, but CNY is the onshore rate traded within the Mainland China and managed by the PBoC, while CNH is the offshore rate traded freely in markets like Hong Kong and London etc. They frequently trade at different levels, and the gap between them has a direct cost impact on cross-border settlements.
Which rate will apply to my RMB payment?
It depends on the settlement corridor your payment routes through. Cross-border trade settlement through Hong Kong typically clears at the CNH (offshore) rate. However, while payments ultimately settle in CNY (onshore) inside the Mainland China, the cross-border transfer must pass through an offshore clearing bank where CNH is converted to CNY.
Why does the CNY-CNH spread widen?
The spread widens when market sentiment diverges from the managed onshore rate, typically during periods of depreciation pressure or capital outflow expectations. CNH reflects free-market demand while CNY is held within a managed band, stress shows up first and most visibly in the offshore market.
Source:
1. https://english.www.gov.cn/policies/latest_releases/2014/08/23/content_281474983027528.htm
