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10 Jun 2026
RMB diversification: Navigating onshore, offshore and multi-currency strategies
As China’s financial system develops and offshore RMB activity expands, RMB diversification has become an increasingly relevant consideration for individual investors with cross-border needs. The Bank for International Settlements (BIS) has noted that offshore RMB markets have grown alongside China’s financial development, even while capital controls remain in place.1 Knowing how onshore and offshore RMB markets work helps investors manage liquidity, control currency risk and strengthen portfolios. As cross-border flows grow, understanding how to send and receive funds or open accounts in China is essential for effective asset management.
DBS Treasures offers clear guidance and advisory support for clients managing these shifts. With broad regional coverage and an international network, DBS Treasures provides multi-currency solutions that link onshore and offshore strategies, helping clients manage global wealth with greater efficiency.
Understanding CNY and CNH in RMB diversification
Diversifying RMB holdings requires understanding the structural and regulatory differences between onshore RMB (CNY) and offshore RMB (CNH). Both are part of China’s global financial system but operate separately, with varying access, liquidity and flexibility.2 Knowing these distinctions helps investors and treasury teams make sound decisions in cross-border asset management and multi-currency allocation.
The fundamental differences between onshore and offshore renminbi
CNY is traded within mainland China under domestic regulations, while CNH is traded outside China, primarily in financial hubs such as Hong Kong, Singapore and London.2 CNY is influenced by the People’s Bank of China’s policy framework, whereas CNH is shaped by market supply and demand. The divergence in pricing and trading conditions reflects China’s gradual financial liberalisation and efforts to internationalise its currency.3
Regulatory frameworks governing CNY and CNH markets
CNY transactions are subject to capital controls that limit foreign participation and require regulatory approval for certain cross-border activities.4 In contrast, CNH operates under a more flexible framework that allows global investors to send money from China, receive money from China or conduct currency conversions with fewer restrictions.5 This dual-market structure enables China to maintain monetary stability domestically while promoting wider RMB usage globally.
Liquidity and accessibility considerations for global investors
Liquidity in offshore RMB markets can often feel more accessible to individual investors because CNH is actively traded in multiple offshore centres and time zones. BIS research notes that offshore RMB trading activity has concentrated in key offshore centres with strong links to onshore markets.3
Onshore markets, while more regulated, provide a more direct pathway to mainland RMB assets and reference pricing conventions tied to domestic market infrastructure, such as the central parity formation process.6
Benefits of multi-currency allocation with RMB
Including the Chinese currency in multi-currency allocations helps balance exposure, support liquidity and strengthen portfolio stability. Understanding the benefits of holding RMB with other major currencies is important for cross-border trade, investment and currency management.
Diversification advantages for reducing currency concentration
Holding a mix of currencies, including RMB, helps reduce overreliance on a single market. A diversified allocation can:
- Protect against fluctuations in dominant global currencies,
- Improve long-term portfolio resilience and
- Support consistent returns across market cycles.
Competitive pricing and cost efficiency in multi-currency strategies
Strategic multi-currency portfolio management often leads to lower transaction costs and greater operational flexibility. Integrating RMB holdings allows investors to benefit from China’s growing market infrastructure and the expanding use of RMB in global settlement systems.
Onshore RMB (CNY) for strategic allocation
The CNY market remains central to China’s financial system and is a key consideration for investors seeking direct exposure to the mainland economy.
Accessing the onshore market through eligible transactions
For most individual clients, direct participation in onshore markets is usually accessed indirectly, through investment products or platforms that use approved market-access arrangements. Common channels include:
- Bond Connect, a mutual market access scheme linking Mainland and Hong Kong bond market infrastructure, enabling overseas participation in the China bond market.7
- Stock Connect, which allows Hong Kong and overseas investors to trade eligible China A-shares and ETFs via the Hong Kong–Mainland trading link (with certain segments subject to eligibility restrictions).8
For certain China onshore exposures (typically at an institutional-programme level), the QFII/RQFII framework exists and the Shanghai Stock Exchange notes it is regulated by the China Securities Regulatory Commission (CSRC), the People’s Bank of China (PBoC) and the State Administration of Foreign Exchange (SAFE), with specific responsibilities split across these authorities.9
Lower tracking error and performance advantages of CNY hedging
CNY-based hedging enables investors to align their exposure with domestic benchmarks, which reduces tracking error and pricing discrepancies compared to CNH hedging. This helps preserve portfolio accuracy and improves performance predictability, particularly for funds benchmarked against Chinese market indices.
Regulatory requirements for offshore investors using CNY
Rules affecting onshore RMB participation and cross-border flows are shaped primarily by mainland authorities, including the PBoC and SAFE. SAFE describes its role in supervising the FX market and monitoring cross-border capital flows and it also publishes the regulatory framework used for foreign institutional participation in China’s securities and futures markets.9
For individual clients, the practical implication is that product access, onboarding documentation and cross-border fund transfers may involve compliance checks and reporting processes—especially where exposure is tied to regulated channels into mainland markets.45
Diversifying RMB holdings across onshore and offshore markets allows investors to strengthen financial resilience and improve cross-border efficiency. With the right strategy, the RMB can serve as a key component of a balanced global wealth portfolio.
Explore more about DBS Treasures’ wealth management solutions to enhance your international investment strategy.
Grow your wealth nowSources:
1 McCauley, Robert. 2011. "Renminbi
internationalisation and China’s financial development."
BIS Quarterly Review, December 2011.
2 Chen, Sally and Kevin Chow. 2019.
"Evolution of Exchange Rate Management in China."
International Monetary Fund, Monetary and Capital
Markets Department, June 3, 2019.
3 Packer, Frank, Andreas Schrimpf and
Vladyslav Sushko. 2019. "Renminbi turnover tilts
onshore." BIS Quarterly Review, December 2019.
4 International Monetary Fund. 2024. Annual
Report on Exchange Arrangements and Exchange
Restrictions 2023.
5 State Administration of Foreign Exchange.
Major Functions.
6 China Foreign Exchange Trade System
(CFETS). CNY Central Parity Rate.
7 Bond Connect Company Limited. Homepage.
8 Hong Kong Exchanges and Clearing Limited.
February 2024. Stock Connect: Gain easy access to China
A-shares and Mainland-listed ETFs.
9 Shanghai Stock Exchange. Rules and
Regulations (QFII/RQFII).