What Is Chinese Currency Called? Renminbi vs. Yuan
Unravel the mystery of China's currency: learn the official names, units, and clarify the distinction between Renminbi and Yuan.
Understanding a country’s currency provides insight into its financial system and its role in the global economy. China’s official currency, the Renminbi, is a key component of its economic framework, facilitating transactions and reflecting its standing on the global stage.
The Official Name and Unit
China’s official currency is known as the Renminbi, often abbreviated as RMB. This term, translating to “the people’s currency,” represents the entire monetary system of the People’s Republic of China. The basic unit of the Renminbi is the Yuan, which functions similarly to how “pound” is the unit of “Pound Sterling” in the United Kingdom. While Renminbi is the overarching name for the currency, the Yuan is the specific unit in which prices are denominated and transactions occur.
This distinction often causes confusion, as both terms are frequently used interchangeably. For example, one might refer to a price as “100 yuan” rather than “100 Renminbi,” similar to saying “five dollars” instead of “five United States dollars.” The ISO 4217 standard code for China’s currency, CNY, further illustrates the Yuan’s prominence in international financial dealings.
The People’s Bank of China, the nation’s central bank, issues the Renminbi. The use of both “Renminbi” and “Yuan” highlights a practical differentiation between the currency’s formal name and its everyday transactional unit.
Physical Forms and Symbols
Chinese currency exists as physical banknotes and coins. Banknotes are circulated in denominations of 1, 5, 10, 20, 50, and 100 Yuan, and also 1, 2, and 5 Jiao. Coins are available in 1 Yuan, 5 Jiao, and 1 Jiao, with less common Fen denominations.
The Yuan is subdivided into smaller units: one Yuan equals 10 Jiao, and one Jiao equals 10 Fen, meaning one Yuan is 100 Fen. While Jiao and Fen are legal tender, Fen coins and notes are rarely encountered in daily use due to their low value.
The official currency symbol for the Yuan is ¥. This symbol is also shared with the Japanese Yen, so CN¥ is sometimes used for clarity. Yuan banknotes feature a prominent portrait of Chairman Mao Zedong on all higher denominations.
Daily Transactions and Global Context
Digital payment methods are now widely prevalent in China, transforming daily transactions. Mobile payment platforms like Alipay and WeChat Pay dominate commerce, allowing payments via QR codes. While cash is still accepted, these platforms often replace physical currency or bank cards for everyday purchases.
Most Chinese consumers frequently use smartphones for daily transactions, from groceries to transportation. The convenience of these digital ecosystems has made them an integral part of the financial routine. Despite the rise of digital payments, physical currency remains important for certain transactions and for those who prefer traditional methods.
Beyond domestic use, the Renminbi has gained recognition in the global financial system. The International Monetary Fund (IMF) included it in its Special Drawing Rights (SDR) basket of reserve currencies. This inclusion, alongside the U.S. dollar, Euro, Japanese Yen, and British Pound, signifies its growing role in international trade and finance.