Are RMB and CNY the Same? A Look at China’s Currency

China’s currency is known as both “Renminbi” (RMB) and “Chinese Yuan” (CNY). While often used interchangeably, understanding their distinct roles is important. The Renminbi is the official name of China’s currency, and the Yuan is its basic unit of account. This is similar to how “sterling” is the name of the British currency, while the “pound” is its primary unit.

Renminbi as the Official Currency

The Renminbi (RMB) is the official currency of the People’s Republic of China. Its name, “Renminbi,” translates to “People’s Currency” in Mandarin. The People’s Bank of China (PBOC), China’s monetary authority, issues this currency. Renminbi serves as legal tender across mainland China, and is sometimes accepted in territories like Hong Kong and Macau.

Introduced by the People’s Bank of China in December 1948, the Renminbi replaced various regional currencies, establishing a unified monetary system. Over the decades, multiple series of Renminbi banknotes and coins have been issued. The Renminbi’s growing global recognition led to its inclusion as one of the International Monetary Fund’s (IMF) reserve currencies in 2016, joining major currencies like the U.S. dollar and the euro.

Chinese Yuan as the Unit of Account

The Chinese Yuan (元), designated by the ISO 4217 code CNY, represents the fundamental unit of the Renminbi. CNY refers to the Yuan unit of the Renminbi traded within mainland China. The symbol for the Yuan is ¥, though CN¥ is sometimes used to differentiate it from the Japanese Yen.

A single Yuan is subdivided into smaller units: one Yuan equals 10 jiao (角), and one jiao is further divided into 10 fen (分). Banknotes are available in various denominations, including 1, 5, 10, 20, 50, and 100 Yuan, alongside jiao and fen denominations. While Renminbi denotes the overall currency system, the Yuan is the unit used for actual transactions and pricing, making it the term most commonly encountered in everyday financial contexts.

Understanding the Onshore and Offshore Markets

The Yuan is traded in two markets: onshore (CNY) and offshore (CNH). The onshore Yuan (CNY) operates within mainland China, subject to strict regulation by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE). The PBOC sets a daily reference rate for the CNY, allowing it to fluctuate within a narrow band, typically 2% above or below this rate. This tight control means the CNY is not freely convertible for capital account transactions, primarily serving domestic economic activities such as purchases, salaries, and business transactions among Chinese companies.

Conversely, the offshore Yuan (CNH) facilitates the international use of the Renminbi outside mainland China, primarily in financial centers like Hong Kong, Singapore, and London. The CNH market operates with fewer restrictions, and its exchange rate is determined by market forces of supply and demand. Although CNY and CNH represent the same currency and generally hold a 1:1 exchange rate when converting between them, their exchange rates against other major currencies can differ due to distinct regulatory environments. This dual market system allows China to maintain domestic currency stability while promoting the Renminbi’s internationalization through a flexible offshore counterpart.