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RMB Bonds: Differences Between CNY and CNH Bonds, Advantages and Risks

8-min read

Updated on 2026-6-18

Author: AIA Content Editorial Team

RMB bonds (Renminbi bonds) refer to debt securities that are denominated, traded, and settled in Renminbi (RMB). They are broadly classified into onshore RMB bonds (CNY bonds) and offshore RMB bonds (CNH bonds). As the world's largest offshore RMB bond market, Hong Kong has introduced initiatives to further develop its bond market¹ in response to growing demand for RMB-denominated assets.

What Are RMB Bonds (Renminbi bonds)?

RMB bonds (Renminbi bonds) are debt instruments issued by governments, financial institutions, or corporations. The principal, interest, pricing, trading, and settlement are all denominated in Renminbi. RMB bonds can be categorised into Onshore RMB bonds (CNY bonds) and Offshore RMB bonds (CNH bonds)².

Onshore RMB Bonds (CNY Bonds)

Onshore RMB bonds, commonly referred to as CNY bonds, are RMB-denominated bonds traded within Chinese Mainland and settled in onshore Renminbi (CNY). As of June 2020, the total outstanding value of China's onshore RMB bond market reached approximately USD 15.5 trillion, making it the second-largest bond market globally³.

Understanding Onshore Credit Risk and Issuer Structure

The onshore RMB bond market is diverse, and it is crucial for investors to recognize that the credit quality can vary widely. The market is primarily segmented into "Rates" and "Credits".

Rates Bonds: According to Allianz Global Investors¹⁰, this is the largest segment (55% as of June 30, 2020) and includes bonds issued by the central government, local governments, and Policy Banks.

Credit Bonds: This segment covers issues from government-linked entities, State-Owned Enterprises (SOEs), financial institutions, and privately owned corporations.

Policy Banks vs. Commercial Banks: Investors should note the difference in issuer objectives. While commercial banks primarily aim to maximize profits, the Central Government and policy banks mainly seek to facilitate government policies. Though policy banks are undergoing commercialization, profit maximization may still not be their primary objective.

The Meaning of Onshore AA+ Ratings: China's domestic credit rating system differs significantly from international rating conventions. For international investors, onshore bonds rated AA+ may correspond more closely to sub-investment-grade (high-yield) ratings under international standards. Unless specified otherwise, most Renminbi bonds are not guaranteed by the Central Government.

Offshore RMB Bonds (CNH Bonds)

To promote the development of China's bond market and the internationalisation of the Renminbi, the first batch of offshore RMB bonds was issued in Hong Kong in 2007⁴. These bonds allow offshore investors to participate in RMB bond investments and are settled in offshore Renminbi (CNH), attracting investors from markets such as Singapore, London, and New York.

According to the Bank for International Settlements (BIS) in 2019, Hong Kong not only maintains a leading position in RMB payments and foreign exchange trading, but is also the largest offshore RMB bond market⁵. Furthermore, the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area states that enterprises within the Greater Bay Area may, subject to regulatory requirements, issue RMB bonds across borders⁶ to strengthen Hong Kong's role as a global offshore RMB business hub.

Onshore CNY vs. Offshore CNH: Key Differences Between RMB Bond Markets

Feature	Onshore CNY Bonds (CNY)	Offshore CNH Bonds (CNH)
Market Size (Approx.)	USD 15.5 trillion (As of June 2020), second largest globally	USD 17 billion (As of Dec 2020)
Predominant Issuer Types	Rates bonds (Government, Policy Banks), SOEs	Mostly Corporate Issuers
Primary Trading Location	Chinese Mainland (e.g., Chinese Interbank Bond Market)	Hong Kong and other offshore centers
Settlement Currency	Onshore Renminbi (CNY)	Offshore Renminbi (CNH)

Risks of RMB Bonds

1. RMB Bond Default Risk (Credit Risk)

RMB bond investors face default risk, where issuers may fail to pay interest or repay principal on time. If an issuer experiences financial distress or management issues, it may be unable to meet its repayment obligations, potentially resulting in a total loss for investors. Generally, the longer a bond's maturity, the higher its default and credit risks.

2. RMB Bond Foreign Exchange Control and Liquidity Risk

As the Renminbi is subject to foreign exchange controls, the Renminbi is subject to foreign exchange controls in Chinese Mainland, capital flow restrictions may affect convertibility between the onshore CNY and offshore CNH markets. As a result, if the central government tightens restrictions, the liquidity of RMB bonds may be affected, exposing investors to liquidity risk.

3. RMB Bond Interest Rate Risk and Inflation Risk

Other potential risks include interest rate risk and inflation risk. When global interest rates rise, bond prices typically fall. Moreover, if RMB bond returns fail to keep pace with inflation, their real purchasing power may decline. In summary, all investments involve risks, and RMB bonds are no exception. Investors should carefully review the relevant offering documents and seek advice from qualified professionals when necessary.

4. RMB Bond Secondary Market Liquidity Risk

An active secondary market may not always be available, even for listed RMB bonds. For unlisted bonds, the distributing bank may not always be able to provide quotes or may terminate secondary market service, meaning investors should be prepared to hold the bond until maturity.

RMB Bonds FAQ

Dim Sum bonds are offshore RMB bonds issued in Hong Kong and settled in offshore Renminbi bonds (CNH). Major issuers include the Ministry of Finance of China, Hong Kong-based enterprises, multinational corporations, international financial institutions, and international organisations, covering a wide range of industries. As offshore RMB bonds were initially issued only in Hong Kong, they were named after a distinctive Hong Kong cultural element — hence the term "Dim Sum bonds".

The key difference between CNY and CNH lies in where they are traded. CNY is used for transactions within Chinese Mainland, while CNH is used for offshore RMB trading outside Chinese Mainland. Although they represent the same currency, exchange rates may differ slightly when converting into other currencies. As Hong Kong is an offshore market, RMB bond investments made in Hong Kong are settled in CNH.

While both refer to the Renminbi, the difference is geographic:

CNY (Onshore Renminbi): This is the Renminbi used for transactions within Chinese Mainland. The People's Bank of China sets its value, allowing it to trade within a daily band.
CNH (Offshore Renminbi): This is the Renminbi used for offshore trading outside Chinese Mainland. The CNH's value is determined by the offshore investors who trade it.

Since Hong Kong is an offshore market, RMB bond investments made there are settled in CNH. Although the prices of CNY and CNH are usually very similar, they can sometimes diverge.

Renminbi (RMB) is the official legal name of China's currency, and it is the term used most often in Asia. Yuan is the term used most frequently outside of Asia, but it still essentially refers to the Renminbi.

Key Takeaways

💡RMB bonds refer to all debt securities denominated and settled in Renminbi

💡RMB bonds include onshore CNY bonds and offshore CNH bonds

💡CNY bonds are traded within Chinese Mainland, while CNH bonds are traded outside Chinese Mainland

💡Hong Kong is the world's largest offshore RMB bond market, and Dim Sum bonds are a type of CNH bond

💡RMB bond investments involve risks, including issuer default risk, foreign exchange control risk, interest rate risk, and inflation risk

💡Investors should review offering documents carefully or consult qualified professionals before investing in RMB bonds

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This information is for general reference only and does not constitute sales advice, product recommendations, or service offers. Before purchasing an insurance product, customers must complete a financial needs analysis. AIA does not guarantee the accuracy and completeness of the content and information provided. AIA reserves the right to pursue legal action and seek compensation for any infringement and/or legal issues.

^1. Information Services Department (2022) ,立法會十九題：發展香港債券市場
² HSBC Asset Management UK (2014), 人民幣債券投資指南
^3. Allianz Global Investors (2020), 有關中國債券市場的9件事

^4. Hong Kong Monetary Authority, 金融基建及香港的國際金融中心地位
^5. Hong Kong Monetary Authority (2023) , 中國業務的主要樞紐

^6. Guangdong-Hong Kong-Macao Greater Bay Area (2019) , 粵港澳大灣區發展規劃綱要
^8. HSBC Asset Management UK (2014) , 人民幣債券投資指南

^9.Hong Kong Exchanges and Clearing Limited(2022), 中國債券投資入門個人投資者須知
^10.Allianz Global Investor (2021), 9 things to know about China's bond markets

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