Diferencias entre CNH y CNY: Guía esencial para entender el sistema monetario chino

Diferencias entre CNH y CNY: Guía esencial para entender el sistema monetario chino

As the world's second-largest economy, China has a monetary system that can be confusing to those unfamiliar with it.

The abbreviations CNH and CNY often cause confusion, but understanding them is key to making financial transactions related to the Asian country.

This article explains the differences between the two denominations and clarifies the context of the Renminbi (RMB) and the Yuan.

What is Renminbi and Yuan?

To begin with, it is important to differentiate between “Renminbi” (RMB) and “Yuan”. The Renminbi, which literally means “people’s currency”, is the official name of China’s currency. On the other hand, the Yuan is the basic unit of the Renminbi.

An example to understand it better: if we compare it with the United Kingdom, the Renminbi is like saying “pound sterling”, while the Yuan is equivalent to the “penny” (basic unit).

It is common to use Yuan in everyday language to refer to the Chinese currency, especially in daily transactions.

CNH and CNY: Why two codes for the Yuan?

The difference between CNH and CNY lies in the context in which each denomination is used. Both refer to the Yuan, but in different markets:

1. The CNY is the Yuan used within Chinese territory, known as the onshore Yuan . It is strictly governed by the regulations of the People's Bank of China (PBoC), which establishes strict control over its exchange rate through a managed float system.

In short, the CNY is the currency used by individuals and businesses for transactions within mainland China.

2. The CNH, or offshore Yuan , is the version of the Yuan that circulates outside of China, mainly in financial centres such as Hong Kong, London and Singapore. Unlike the CNY, the CNH has a freer exchange rate, as it is not subject to the strict controls of the Chinese government.

This makes it a preferred choice for international investors and companies seeking greater flexibility in transactions.

When to use CNH and when to use CNY?

Knowing which currency to use depends on the location and purpose of the transaction:

Transactions within China: CNY is always used. For example, if a foreign company pays a Chinese supplier, the transaction will be in CNY.

International transactions with China: CNH is used for investments, bonds and other financial transactions outside mainland China. For example, if a company wants to negotiate contracts in Hong Kong, it will do so using CNH.

Global Trading: CNH is most common in international markets, as its price is determined by supply and demand in global financial markets.

Control and flexibility: the political and economic background

The use of CNY and CNH reflects China's strategy to control its economy while facilitating international trade.

CNY: The People's Bank of China sets a daily "central exchange rate", allowing limited fluctuations in its value, ensuring internal stability.

CNH: Being less regulated, the CNH allows China to actively participate in international markets without compromising its domestic monetary policy.

This duality strengthens China’s position as a key player in the global economy, while protecting its financial system from external fluctuations.

Frequently Asked Questions about the Yuan

Is the value of CNH and CNY the same? Not always. Although they are usually aligned, the value of CNH can differ from CNY due to its free fluctuation in international markets.

Can CNH be exchanged for CNY? Yes, but this requires compliance with Chinese government regulations. Conversions must be made through authorized channels.

Which is more commonly used for foreign investment? The CNH is preferred, as its free listing provides greater flexibility to investors.

Conclusion

Understanding the differences between CNH and CNY is essential for any person or company doing business with China.

While the CNY operates within China's borders, the CNH operates more freely in international markets. This dual system, though complex, reflects the balance China seeks between internal control and global integration.

Ultimately, both the CNH and the CNY are part of a single monetary system, the central axis of which is the Renminbi, with the Yuan as its base unit. Understanding these terms not only facilitates financial transactions, but also offers insight into the complex economic system of the Asian giant.