Renminbi
Renminbi (; Chinese: 人民币; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and the unrecognized territory of Wa State. The currency is issued by the People's Bank of China, the country's monetary authority. It is the world's fifth-most-traded currency as of April 2025.
Overview
Renminbi (; Chinese: 人民币; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and the unrecognized territory of Wa State. The currency is issued by the People's Bank of China, the country's monetary authority. It is the world's fifth-most-traded currency as of April 2025. The yuan (元) is the base unit of renminbi. Each yuan is divided into 10 jiao (角), and each jiao is further subdivided into 10 fen (分; a total of 100 fen in each yuan). However, fen-denominated coins are now rarely used due to inflation. The word yuan is widely used to refer to the Chinese currency generally, especially in international contexts.
Exchange rate
Until 2005, the exchange rate of the renminbi was pegged to the US dollar. As China pursued the reform and opening up to transition from central planning to a market economy and increased its participation in foreign trade, the renminbi was devalued to increase the competitiveness of Chinese industry. It has previously been claimed that the renminbi's official exchange rate was undervalued by as much as 37.5% against its purchasing power parity. In 2011, the International Monetary Fund (IMF) stated that the renminbi was undervalued by 23%. However, more recently, appreciation actions by the Chinese government, as well as quantitative easing measures taken by the American Federal Reserve and other major central banks, have caused the renminbi to be within as little as 8% of its equilibrium value by the second half of 2012. Since 2006, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. By 2015, the IMF assessed it as no longer undervalued. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. As a result of the rapid internationalization of the renminbi, it became the world's 8th most traded currency in 2013, 5th by 2015, but 6th in 2019. In 2026, the IMF stated that the renminbi was undervalued by 16%. On 1 October 2016, the renminbi became the first emerging market currency to be included in the IMF's special drawing rights basket, the basket of currencies used by the IMF as a reserve currency. Its initial weighting in the basket was 10.9%.
Terminology
The ISO code for the renminbi is CNY, the PRC's country code (CN) plus "Y" from "yuan". Renminbi that is traded off-shore (internationally) uses the designation CNH, while the on-shore (internal) currency is designated CNY. CNY is used only in mainland China, is controlled by the People's Bank of China, and uses a fixed daily exchange rate. CNH is used outside of the mainland, is not restricted like CNY, and the exchange rate is determined by the market. The abbreviation RMB is not an ISO code but is sometimes used like one by banks and financial institutions. The currency symbol for the yuan unit is ¥, but when distinction from the Japanese yen is required RMB (e.g. RMB 10,000) or ¥ RMB (e.g. ¥10,000 RMB) is used. However, in written Chinese contexts, the Chinese character for yuan (Chinese: 元; lit. 'constituent', 'part') or, in formal contexts Chinese: 圆; lit. 'round', usually follows the number in lieu of a currency symbol. 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. Jiao and fen are also units of renminbi. In everyday Mandarin, kuai (Chinese: 块; pinyin: kuài; lit. 'piece') is usually used when discussing money and "renminbi" or "yuan" are rarely heard. Similarly, Mandarin speakers typically use mao (Chinese: 毛; pinyin: máo) instead of jiao. For example, ¥8.74 might be read as 八块七毛四 (pinyin: bā kuài qī máo sì) in everyday conversation, but read 八元七角四分 (pinyin: bā yuán qī jiǎo sì fēn) formally. Renminbi is sometimes referred to as the "redback", a play on "greenback", a slang term for the US dollar.
History
The various currencies called yuan or dollar issued in mainland China as well as Taiwan, Hong Kong, Macau and Singapore were all derived from the Spanish dollar, which China imported in large quantities from Spanish America from the 16th to 20th centuries. The first locally minted silver dollar or yuan accepted all over Qing dynasty China (1644–1912) was the silver dragon dollar introduced in 1889. Various banknotes denominated in dollars or yuan were also introduced, which were convertible to silver dollars until 1935 when the silver standard was discontinued and the Chinese yuan was made fabi (法币; legal tender fiat currency). The renminbi was introduced by the People's Bank of China in December 1948, about a year before the establishment of the People's Republic of China. It was issued only in paper form at first, and replaced the various currencies circulating in the areas controlled by the Communists. One of the first tasks of the new government was to end the hyperinflation that had plagued China in the final years of the Kuomintang (KMT) era. That achieved, a revaluation occurred in 1955 at the rate of 1 new yuan = 10,000 old yuan. In 2019, the People's Bank of China released an updated edition of the fifth series of renminbi banknotes and coins. The update included new versions of the ¥50, ¥20, ¥10, and ¥1 banknotes, as well as the ¥1, ¥0.5, and ¥0.1 coins. These featured improved security features, enhanced printing quality, and brighter coloration to combat counterfeiting and improve recognizability. Notably, the ¥100 banknote from the 2015 issue remained unchanged in this release. As the Chinese Communist Party took control of ever larger territories in the latter part of the Chinese Civil War, its People's Bank of China began to issue a unified currency in 1948 for use in Communist-controlled territories. Also denominated in yuan, this currency was identified by different names, including "People's Bank of China banknotes" (simplified Chinese: 中国人民银行钞票; traditional Chinese: 中國人民銀行鈔票; from November 1948), "New Currency" (新币; 新幣; from December 1948), "People's Bank of China notes" (中国人民银行券; 中國人民銀行券; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or "renminbi", from June 1949. In the early 2020s, China launched the digital renminbi, also known as the digital yuan or e-CNY, a central bank digital currency (CBDC) developed by the People's Bank of China. Pilot programs began in 2020 in cities such as Shenzhen, Suzhou, and Chengdu. By 2023, e-CNY had been integrated into a wide range of applications, including public transportation, government subsidies, retail payments, and cross-border trials. The digital yuan is intended to enhance payment system resilience, offer an alternative to private payment platforms like Alipay and WeChat Pay, and support financial inclusion.
Era of the command economy
From 1949 until the late 1970s, the state fixed China's exchange rate at a highly overvalued level as part of the country's import-substitution strategy. During this time frame, the focus of the state's central planning was to accelerate industrial development and reduce China's dependence on imported manufactured goods. The overvaluation allowed the government to provide imported machinery and equipment to priority industries at a lower domestic currency cost than otherwise would have been possible.
Transition to an equilibrium exchange rate
China's transition by the mid-1990s to a system in which the value of its currency was determined by supply and demand in a foreign exchange market was a gradual process spanning 15 years that involved changes in the official exchange rate, the use of a dual exchange rate system, and the introduction and gradual expansion of markets for foreign exchange. The most important move to a market-oriented exchange rate was an easing of controls on trade and other current account transactions, as occurred in several very early steps. In 1979, the State Council approved a system allowing exporters and their provincial and local government owners to retain a share of their foreign exchange earnings, referred to as foreign exchange quotas. At the same time, the government introduced measures to allow retention of part of the foreign exchange earnings from non-trade sources, such as overseas remittances, port fees paid by foreign vessels, and tourism. As early as October 1980, exporting firms that retained foreign exchange above their own import needs were allowed to sell the excess through the state agency responsible for the management of China's exchange controls and its foreign exchange reserves, the State Administration of Exchange Control. Beginning in the mid-1980s, the government sanctioned foreign exchange markets, known as swap centres, eventually in most large cities. 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%.
Foreign exchange certificates, 1980–1994
In the process of opening up China to external trade and tourism, transactions with foreign visitors between 1980 and 1994 were done primarily using foreign exchange certificates (外汇券; waihuiquan) issued by the Bank of China. Foreign currencies were exchangeable for FECs and vice versa at the renminbi's prevailing official rate which ranged from US$1 = ¥2.8 FEC to ¥5.5 FEC. The FEC was issued as banknotes from ¥0.1 to ¥100, and was officially at par with the renminbi. Tourists used FECs to pay for accommodation as well as tourist and luxury goods sold in Friendship Stores. However, given the non-availability of foreign exchange and Friendship Store goods to the general public, as well as the inability of tourists to use FECs at local businesses, an illegal black market developed for FECs where touts approached tourists outside hotels and offered over ¥1.30 RMB in exchange for ¥1 FEC.
Evolution of exchange policy since 1994
In November 1993, the Third Plenum of the 14th Central Committee of the Chinese Communist Party approved a comprehensive reform strategy in which foreign exchange management reforms were highlighted as a key element for a market-oriented economy. A floating exchange rate regime and convertibility for renminbi were seen as the ultimate goal of the reform. 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.
Convertibility
During the era of the command economy, the value of the renminbi was set to unrealistic values in exchange with Western currency and severe currency exchange rules were put in place, hence the dual-track currency system from 1980 to 1994 with the renminbi usable only domestically, and with Foreign Exchange Certificates (FECs) used by foreign visitors. In the late 1980s and early 1990s, China worked to make the renminbi more convertible. Through the use of swap centres, the exchange rate was eventually brought to more realistic levels of above ¥8/US$1 in 1994 and the FEC was discontinued. It stayed above ¥8/$1 until 2005 when the renminbi's peg to the dollar was loosened and it was allowed to appreciate. As of 2013, the renminbi is convertible on current accounts but not capital accounts. The ultimate goal has been to make the renminbi fully convertible. However, partly in response to the Asian financial crisis in 1998, China has been concerned that the Chinese financial system would not be able to handle the potential rapid cross-border movements of hot money, and as a result, as of 2012, the currency trades within a narrow band specified by the Chinese central government. Following the internationalization of the renminbi, on 30 November 2015, the IMF voted to designate the renminbi as one of several main world currencies, thus including it in the basket of special drawing rights. The renminbi became the first emerging market currency to be included in the IMF's SDR basket on 1 October 2016. The other main world currencies are the dollar, the euro, sterling, and the yen.
Digital renminbi
In October 2019, China's central bank, PBOC, announced that a digital renminbi was going to be released after years of preparation. This version of the currency, also called DCEP (Digital Currency Electronic Payment), can be "decoupled" from the banking system to give visiting tourists a taste of the nation's burgeoning cashless society. The announcement received a variety of responses: some believe it is more about domestic control and surveillance. Some argue that the real barriers to internationalisation of the renminbi are China's capital controls, which it has no plans to remove. Maximilian Kärnfelt, an expert at the Mercator Institute for China Studies, said that a digital renminbi "would not banish many of the problems holding the renminbi back from more use globally". He went on to say, "Much of China's financial market is still not open to foreigners and property rights remain fragile." The PBOC has filed more than 80 patents surrounding the integration of a digital currency system, choosing to embrace the blockchain technology. The patents reveal the extent of China's digital currency plans. The patents, seen and verified by the Financial Times, include proposals related to the issuance and supply of a central bank digital currency, a system for interbank settlements that uses the currency, and the integration of digital currency wallets into existing retail bank accounts. Several of the 84 patents reviewed by the Financial Times indicate that China may plan to algorithmically adjust the supply of a central bank digital currency based on certain triggers, such as loan interest rates. Other patents are focused on building digital currency chip cards or digital currency wallets that banking consumers could potentially use, which would be linked directly to their bank accounts. The patent filings also point to the proposed 'tokenomics' being considered by the DCEP working group. Some patents show plans towards programmed inflation control mechanisms. While the majority of the patents are attributed to the PBOC's Digital Currency Research Institute, some are attributed to state-owned corporations or subsidiaries of the Chinese central government. Uncovered by the Chamber of Digital Commerce (an American non-profit advocacy group), their contents shed light on Beijing's mounting efforts to digitise the renminbi, which has sparked alarm in the West and spurred central bankers around the world to begin exploring similar projects. Some commentators have said that the U.S., which has no current plans to issue a government-backed digital currency, risks falling behind China and risking its dominance in the global financial system. Victor Shih, a China expert and professor at the University of California San Diego, said that merely introducing a digital currency "doesn't solve the problem that some people holding renminbi offshore will want to sell that renminbi and exchange it for the dollar", as the dollar is considered to be a safer asset. Eswar Prasad, an economics professor at Cornell University, said that the digital renminbi "will hardly put a dent in the dollar's status as the dominant global reserve currency" due to the United States' "economic dominance, deep and liquid capital markets, and still-robust institutional framework". The U.S. dollar's share as a reserve currency is above 60%, while that of the renminbi is about 2%. In April 2020, The Guardian reported that the digital currency e-RMB had been adopted into multiple cities' monetary systems and "some government employees and public servants [will] receive their salaries in the digital currency from May. The Guardian quoted a China Daily report which stated "A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption." There were talks of testing out the digital renminbi in the Beijing Winter Olympics in 2022, but China's overall timetable for rolling out the digital currency was unclear.
Interest rate and green bonds
In May 2023, RMB interest rate swaps was launched. In June 2023, under the Government Green Bond Programme, the Government of the Hong Kong Special Administrative Region of the People's Republic of China (HKSAR) announced a green bonds offering, of approximately US$6 billion denominated in USD, EUR and RMB.
Issuance
As of 2019, renminbi banknotes are available in denominations of ¥0.1, ¥0.5 (1 and 5 jiao), ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. These denominations have been available since 1955, except for the ¥20 notes (added in 1999 with the fifth series) ¥50 and ¥100 notes (added in 1987 with the fourth series). Coins are available in denominations from ¥0.01 to ¥1. Thus some denominations exist in both coins and banknotes. On rare occasions, larger yuan coin denominations such as ¥5 have been issued to commemorate events but use of these outside of collecting has never been widespread. The denomination of each banknote is printed in simplified written Chinese. The numbers themselves are printed in financial Chinese numeral characters, as well as Arabic numerals. The denomination and the words "People's Bank of China" are also printed in Mongolian, Tibetan, Uyghur and Zhuang on the back of each banknote, in addition to the boldface Hanyu Pinyin "Zhongguo Renmin Yinhang" (without tones). The right front of the note has a tactile representation of the denomination in Chinese Braille starting from the fourth series. See corresponding section for detailed information. The fen and jiao denominations have become increasingly unnecessary as prices have increased. Coins under ¥0.1 are used infrequently. Chinese retailers tend to avoid fractional values (such as ¥9.99), opting instead to round to the nearest yuan (such as ¥9 or ¥10).
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