Is Yuan and RMB the Same? Key Differences Explained
Understand China's currency system. This guide clarifies the precise relationship and usage distinctions between Yuan and Renminbi (RMB).
The terms “Yuan” and “Renminbi” often confuse those trying to understand China’s currency system. While frequently used interchangeably, these terms hold distinct meanings within the financial landscape of the People’s Republic of China. Clarifying their relationship is important for anyone engaging with Chinese economics or seeking to understand daily financial interactions in the country.
The Official Name and Basic Unit
Renminbi (RMB) is the official currency of the People’s Republic of China. The People’s Bank of China, the nation’s central bank, issues and manages this currency. “Renminbi” translates to “the people’s currency,” reflecting its role as legal tender across mainland China.
The Yuan serves as the basic unit of the Renminbi. This relationship is similar to how “pound sterling” is the UK’s currency, but “pound” is its unit, or “US Dollar” is the currency, and “dollar” is the unit. Thus, Renminbi is the currency system, while the Yuan represents a measurable quantity of that currency.
How the Terms are Used
The practical application of “Renminbi” and “Yuan” varies by context. “Renminbi” is used in formal settings, such as official financial statements, international market discussions, and macroeconomic analyses. It refers to the currency system as a whole, especially when discussing China’s monetary policy or its role in global trade. The ISO 4217 international currency code for the Chinese currency is CNY, which stands for “Chinese Yuan,” though “RMB” is also widely used by financial institutions.
Conversely, “Yuan” is the term commonly used for specific monetary amounts in everyday transactions. Prices are quoted in Yuan, and people refer to amounts like “five Yuan” for an item. This usage is similar to saying “five dollars” in the United States instead of “five US dollars.” In colloquial Mandarin, “kuai” is often used instead of “Yuan,” much like “bucks” for “dollars” in English.
Understanding the Currency Symbol and Denominations
The currency symbol for the Yuan is “¥.” This symbol can cause confusion as it is also used for the Japanese Yen. To differentiate, especially in international financial contexts, the ISO code CNY is used for the Chinese Yuan, while JPY designates the Japanese Yen.
The Yuan is divided into smaller denominations. One Yuan equals 10 jiao (角), and one jiao equals 10 fen (分). While Yuan banknotes and coins are widely circulated, jiao and fen denominations are less common in daily transactions, particularly fen, due to their lower value. Banknotes range from 1 Yuan to 100 Yuan, and coins are issued for Yuan and jiao amounts, as well as some fen.