Yet prior to splashing out in Beijing, it is useful to know some basics about the Chinese currency yuan (or renminbi), how to change your money into yuan, related Chinese foreign exchange policies and so on. This hierarchical structure is similar to the system used in many other currencies, such as dollars and cents or pounds and pence. The renminbi (RMB) is the official currency of China, symbolizing the country’s monetary authority. The term “renminbi” means “people’s currency” in Mandarin, reflecting the government’s socialist principles when the currency was established.

The People’s Bank of China (PBOC) was established during the Chinese Civil War. It issued the first RMB notes in December 1948, about a year before the Chinese Communist Party defeated the Kuomintang government. The modern-day Chinese yuan uses the abbreviation CNY to distinguish between the mainland currency and other uses of the word. An orange polymer note, commemorating the new millennium was issued in 2000 with a face value of ¥100. This features a dragon on the obverse and the reverse features the China Millennium monument (at the Center for Cultural and Scientific Fairs).

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The yuan is the name of the unit in which renminbi transactions are denominated, but also refers to the currency generally. Thus, a person might pay for a meal using a 20 yuan banknote, and get some yuan and jiao (a tenth of a yuan) in change (the jiao is further divided into 10 fen). This is similar to the pound sterling, which is the name of the British currency, while the price of a pint of beer in a London pub would be stated just in pounds. With the second RMB series issued in 1955 and the third in 1962, things were fairly straightforward, in line with what one would expect from a centrally planned economy with wage and price controls in place.

Transition to an equilibrium exchange rate

In recent years, China has actively promoted the use of the yuan in global trade and finance. Initiatives such as currency swap agreements with other countries, the inclusion of the yuan in the International Monetary Fund’s Special Drawing Rights (SDR) basket, and the establishment of offshore yuan trading centers have bolstered the yuan’s international profile. The largest banknote is 100 yuan, followed by 50 yuan, 20 yuan, 10 yuan, five yuan, and one yuan. There are 10 jiao in a yuan, like dimes in a dollar, and 10 fen in a jiao. Understanding the difference between CNY and CNH is crucial when dealing with Chinese suppliers.

The People’s Republic of China (PRC), AKA “Today’s China”

This gives you the flexibility to pay suppliers in their local currency while saving on FX fees. CNH is used for trading in international markets, including cities like Hong Kong, New York, London and Singapore. As a foreign company, you would use CNH for conducting transactions that involve China but are outside of Mainland China. In essence, transactions in CNY are restricted while there are no restrictions on CNH. But the most important difference is that while the local value of CNY is still dictated by the People’s Bank of China (PBOC), the CNH is freely tradeable like most other currencies.

Real exchange rate

• This gives you the flexibility to pay suppliers in their local currency while saving on FX fees.
• CNY is the official currency abbreviation for the Chinese yuan under the ISO 4217 standard, but RMB is often used as an unofficial abbreviation.
• Before 2009, the renminbi had little to no exposure in the international markets because of strict government controls by the central Chinese government that prohibited almost all export of the currency, or use of it in international transactions.
• This is the “piece of eight” (or “real de a ocho”) beloved of pirates and their parrots – worth eight reales and known as a peso in Spanish and a dollar in English.

The yuan suffered its largest-ever monthly price drop in April 2022, losing 7% of its value over three months. Some economists believe that these controls keep the yuan artificially devalued, making the country’s exports more attractive. The International Monetary Fund (IMF) reported in the summer of 2018 that the Chinese yuan was in line with fundamentals, only to then witness the yuan reach a 13-month low in response to an escalating tariff war with the United States.

What to know about the Chinese currency when doing business in China

With WorldFirst, businesses can easily hold multiple currency accounts, convert funds at competitive rates, and send payments to China, where they’re automatically exchanged into CNY. This simplifies transactions, reduces costs, and ensures smooth payments to suppliers. Back in the days before China was the industrial and economic behemoth that it is now, the Chinese economy was relatively closed and the conversion of international currency was heavily restricted. The Chinese government wanted to make sure that it held control of the money in the economy and to limit the amount of currency and wealth that could flow out of the country. Both of China’s currencies are officially called renminbi (RMB), meaning “the people’s currency” in Mandarin, and the yuan is actually the unit of account. With China’s economic reforms in the 1980s, the RMB was devalued and became more easily traded, creating a more realistic exchange rate.

• The renminbi (RMB) is the official currency of China, symbolizing the country’s monetary authority.
• The renminbi yuan has different names when used in ethnic minority regions of China.
• This simplifies transactions, reduces costs, and ensures smooth payments to suppliers.
• Typically the values will diverge depending on liquidity – in other words, how easily traders can get hold of a currency and the overall flows into the Chinese currency around Chinese New Year.

This is to distinguish the rates from those fixed by Chinese central banks on the mainland.15 The abbreviation RMB is not an ISO code but is sometimes used like one by banks and financial institutions. China’s central bank devalued its currency last week, sending major stock markets in Asia and Europe down, and sparking fears of additional exchange rate devaluations in other countries. When reading news and analysis of this event, you might see both terms—“renminbi” and “yuan”—used interchangeably. The renminbi is the official currency of the People’s Republic of China, and translates to “people’s money.” Its international symbol is CNY (or CNH in Hong Kong; but abbreviated RMB, with the symbol ¥).

These depict the national emblem on the obverse (front) and the name and denomination framed by wheat stalks on the reverse (back). In 1980, brass ¥0.1, ¥0.2, and ¥0.5 and cupro-nickel ¥1 coins were added, although the ¥0.1 and ¥0.2 were only produced until 1981, with the last ¥0.5 and ¥1 avatrade review issued in 1985. All jiǎo coins depicted similar designs to the fēn coins while the yuán depicted the Great Wall of China.

Markets located in Hong Kong that trade the Chinese currency at free-floating rates use another unofficial code – CNH. The RMB acts as one of the most-held reserve currencies in the world, while being the eighth most-traded currency globally. Elena, a seasoned foreign exchange trader with a proven track record in the dynamic world of currency markets, brings a wealth of expertise and professionalism to the financial realm.

The word they use is “kuai”, which literally means “piece”, and is the word used historically for coins made of silver or copper. China’s first domestically produced machine-struck dollar coin, or yuan, was minted in Guangdong province in 1890. The European merchants who started arriving in the early 16th Century went to China to buy silk and porcelain. Their trade99 review Chinese partners wanted silver, preferably these large European-style silver coins. The renminbi yuan has different names when used in ethnic minority regions of China.

The traditional character for yuan is also used in the currencies of other Chinese-speaking regions in the 2020s, including the New Taiwan dollar and the Hong Kong dollar. From 1972 to 1979, the renminbi went up in value compared to the US dollar, with 1.5 yuan being worth one US dollar. As the more loyal ChinaFund.com readers know all too well by now, Deng Xiaoping’s reforms started kicking in and the currency dimension was, of course, included in the equation. More specifically, the economy of China was becoming more open on all fronts and as of 1979, firms were actually allowed to retain a certain foreign exchange claim percentage.

Proving a success,82 the program was further extended to 20 Chinese provinces and counterparties internationally in July 2010, and in September 2011 it was announced that the remaining 11 Chinese provinces would be included. In 2015 the People’s Bank of China again devalued their country’s currency. In recognition of the imminent 2022 Winter Olympics, the People’s Bank of China issued ¥20 commemorative banknotes in both paper and polymer in December 2021. In commemoration of the 70th anniversary of the Renminbi, the People’s Bank of China issued 120 million ¥50 banknotes on 28 December 2018. In 1953, aluminium ¥0.01, ¥0.02, and ¥0.05 coins began being struck for circulation, and were first introduced in 1955.

China has increased its attempts to back its currency, including promoting free usage of the renminbi. Whether you know it as yuan or renminbi, what matters is that the currency from China remains a part of the currency conversation on the global stage. Since 2019, we’ve been part of Ant Group, the Chinese company that operates the lifestyle platform Alipay. Since Alipay serves 1.3 billion users worldwide, fxchoice review we’re able to leverage one of the largest global commerce ecosystems in the world and enable users to make transfers in 100+ currencies. The key difference lies in how they’re regulated and traded – CNY is used within mainland China under strict government control, while CNH circulates offshore with greater flexibility. The obverse of the 1999-type 100-yuan notes is a portrait of Mao Zedong while a picture of the Great Hall of the People is printed on the reverse.

In 1999, a commemorative red ¥50 note was issued in honour of the 50th anniversary of the establishment of the People’s Republic of China. This note features Chinese Communist Party chairman Mao Zedong on the front and various animals on the back.