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Yuan vs Renminbi: What’s the Difference?

By Ramanand

what is the yuan

In April of 2022, the yuan suffered its largest-ever monthly price drop, losing 7% of its value over three months.

These percentages show how much the exchange rate has fluctuated over the last 30 and 90-day periods. These are the lowest points the exchange rate has been at in the last 30 and 90-day periods. These are the highest points the exchange rate has been at in the last 30 and 90-day periods. In commemoration of the 2024 Chinese New Year, the People’s Bank of China issued ¥20 commemorative banknotes in polymer in January 2024.

When China’s economy opened in 1978, the Yuan Renminbi was only used domestically and foreigners used exchange certificates; this led to a powerful black market. From 1997 to 2005, the Chinese government pegged the Chinese Yuan Renminbi to the US Dollar at approximately 8.3 CNY to 1 USD. In 2005, a flexible mechanism of exchange rates was phased in, with the RMB being re-evaluated to 8.1 Renminbi per US dollar. The Chinese government launched a pilot program in 2009, allowing some businesses in Guangdong and Shanghai to execute business and trade transactions with counterparties in Hong Kong, Macau, and select nations. The program has since expanded to all areas of China and all international counterparties.

The number of banks issuing paper money increased after the revolution. An exceptionally large number of banknotes were issued during the Republican era (1911–1949) by provincial banks (both Nationalist and Communist). The Chinese yuan renminbi is the official currency of mainland China. As noted above, the term yuan refers to a single unit of the currency while the term renminbi refers to the actual name of the currency itself. The yuan is abbreviated as CNY while the renminbi is abbreviated as RMB. The latter was introduced to the country by the Communist People’s Republic of China at the time of its founding in 1949.

Related currency units

However, this then began to change as the Chinese government started to promote the international use of the RMB. During the Chinese Civil War, the communist party established the People’s Bank of China and issued the first renminbi notes in December 1948, about a year before it defeated the Kuomintang government. Some only issued silver 1 yuan coins (Hunan, Eyuwan, Northeastern Jiangxi, North Shaanxi and Pingjiang) whilst the West Hunan-Hubei Soviet only issued copper 1 fen coins and the North-West Anhui Soviet issued only copper 50 wen coins. The Chinese Soviet Republic issued copper 1 and 5 fen and silver 2 jiao and 1 yuan coins. The Sichuan-Shaanxi Soviet issued copper 200 and 500 wen and silver 1 yuan coins.

  1. China uses currency controls to maintain the value of the Chinese Yuan at a favorable level.
  2. These percentages show how much the exchange rate has fluctuated over the last 30 and 90-day periods.
  3. Known as the New Taiwan dollar, it remains the currency of Taiwan today.
  4. In the aftermath of the Second World War and during the civil war which followed, Nationalist China suffered from hyperinflation, leading to the introduction of a new currency in 1948, the gold yuan.
  5. In November 1993, the Third Plenum of the Fourteenth CPC Central Committee approved a comprehensive reform strategy in which foreign exchange management reforms were highlighted as a key element for a market-oriented economy.

It maintained its value (at times being worth a little more than the yen) until 1925, when Zhang Zuolin’s military involvement in the rest of China lead to an increase in banknote production and a fall in the currency’s value. The currency lost most of its value in 1928 as a consequence of the disturbance following Zhang Zuolin’s assassination. The Fengtien yuan was only issued in banknote form, with 1, 5 and 10 yuan notes issued in 1917, followed by 50 and 100 yuan notes in 1924. The earliest issues were silver coins produced at the Guangdong mint, known in the West at the time as Canton, and transliterated as Kwangtung, in denominations of 5 cents, 1, 2 and 5 jiao and 1 yuan. Other regional mints were opened in the 1890s producing similar silver coins along with copper coins in denominations of 1, 2, 5, 10 and 20 cash.[4] The central government began issuing its own coins in the yuan currency system in 1903.

Xe Rate Alerts

Beginning in January 2010, Chinese and non-Chinese citizens have an annual exchange limit of a maximum of US$50,000. Currency exchange will only proceed if the applicant appears in person at the relevant bank and presents their passport or Chinese ID. The maximum dollar withdrawal is $10,000 per day, the maximum purchase limit of US dollars is $500 per day. This stringent management of the currency leads to a bottled-up demand for exchange in both directions. It is viewed as a major tool to keep the currency peg, preventing inflows of “hot money”. Banknote printing facilities are based in Beijing, Shanghai, Chengdu, Xi’an, Shijiazhuang, and Nanchang.

what is the yuan

In order to distinguish between the mainland currency with other uses of the word, the modern-day Chinese Yuan uses the abbreviation CNY. In Mandarin Chinese, the character yuan is used for round or circular things. This word was also used for the silver Spanish dollars introduced by European merchants in the seventeenth and eighteenth centuries.

Connection with dollar

This silver yuan remained the de jure official currency of the Republic government in Taiwan until 2000. The term Chinese yuan renminbi (CNY) refers to the currency used in the People’s Republic of China. Although it may seem a little confusing because the names are often depicted together, they’re actually two separate terms. A yuan acts as China’s unit of account for its financial system and economy, which represents a single unit of money. The term renminbi, on the other hand, is the official name of the currency itself. For most of its early history, the renminbi was pegged to the U.S. dollar at ¥2.46 per dollar.

What’s the difference between the renminbi and the yuan?

In the summer of 2018, the IMF reported 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. When shopping in China, a storekeeper might also express prices in terms of kuai, which translates into “pieces,” and is similar to how Americans use “bucks” to mean dollars. Similarly the yuan’s share of global payments was 1.97 per cent in September, the fifth most active currency, while the US dollar was in first position, commanding 38.45 per cent of payments.

In 1946, a new currency was introduced for circulation there, replacing the Japanese issued Taiwan yen, the Old Taiwan dollar. In 1949, a second yuan was introduced in Taiwan, replacing the first at a rate of 40,000 to 1. Known as the New Taiwan dollar, it remains the currency of Taiwan today. The various Soviets under the control of the Chinese Communist Party issued coins between 1931 and 1935, and banknotes between 1930 and 1949. Some of the banknotes were denominated in chuàn, strings of wén coins. The People’s Bank was founded in 1948 and began issuing currency that year, but some of the regional banks continued to issue their own notes in to 1949.

Conditional convertibility under current account was achieved by allowing firms to surrender their foreign exchange earning from current account transactions and purchase foreign exchange as needed. Restrictions on Foreign Direct Investment (FDI) was also loosened and capital inflows to China surged. The first locally minted silver dollar or yuan accepted all over Qing dynasty China (1644–1912) was the silver dragon dollar introduced in 1889.

As a result, China is urgently trying to crack the hegemony of the US dollar and promote use of the yuan beyond its borders to minimise disruptions to its trade and investment activities. The renminbi is sometimes called the “redback” by Western media, a play on “greenback”, which is used informally to describe the US dollar. Officially, China’s currency is the renminbi, which literally means “the people’s currency” in Mandarin. In 1949, the Communist Party defeated the Kuomintang and Mao Zedong proclaimed the People’s Republic of China, making the renminbi the sole legal currency across the country. Check live rates, send money securely, set rate alerts, receive notifications and more. The Japanese yen (en) was originally also written with the kanji (Chinese) character 圓, which was simplified to 円 with the promulgation of the Tōyō kanji in 1946.

The People’s Bank of China again lowered the renminbi’s daily fix to the US dollar from ¥6.620 to ¥6.6375 after Brexit on 27 June 2016. The renminbi yuan has different names when used in ethnic minority regions of China. The Chinese Yuan continued to lose value during the COVID-19 pandemic, largely due to reduced economic activity and strict lockdowns.

In commemoration of the 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 issuance of the Renminbi, the People’s Bank of China issued 120 million ¥50 banknotes on 28 December 2018. The government also gradually allowed market forces to take the dominant role by introducing an “internal settlement rate” of ¥2.8 to 1 US dollar which was a devaluation of almost 100%. The digital yuan, or e-CNY, is only available to users of certain banks in certain Chinese cities. As of April of 2022, the digital yuan app is available in 23 Chinese cities, and the digital yuan can be purchased through seven Chinese banks, as well as the online payment services WeChat and Alipay. The word “yuan” is frequently used in Mandarin translations of foreign currencies.

Renminbi is the name of the currency while yuan is the name of the primary unit of the renminbi. This is analogous to the distinction between “sterling” and “pound” when discussing the official currency of the United Kingdom.[13] Jiao and fen are also units of renminbi. In 1948, the Central Bank of China issued notes (some dated 1945 and 1946) in denominations of 1, 2 and 5 jiao, 1, 5, 10, 20, 50, and 100 yuan. In 1949, higher denominations of 500, 1000, 5000, 10,000, 50,000, 100,000, 500,000, 1,000,000 and 5,000,000 yuan were issued. The Central Bank of China issued notes in denominations of 1 and 5 fen, 1, 2 and 5 jiao, 1, 5 and 10 yuan. The yuan was derived from the Spanish dollar or Mexican dollar, worth eight Spanish reales and popularly known as the piece-of-eight.