What Currency Is Used In China?

October 12, 2023

The Chinese Yuan (CNY) and the people's renminbi are the two names for money in China (RMB). The yuan serves as the primary unit of account for the renminbi, which is the official currency of China. This distinction is subtle. China's currency is the renminbi, often known as the yuan or "people's money" in Chinese. There are 100 fen or 10 jiao in one renminbi (yuan).

Only the People's Bank of China has the power to print money. Banknotes are printed in values ranging from one fen to one hundred renminbi. Some banknotes have communist figures like Mao Zedong, the architect of the communist revolution in China, depicted on the obverse. 

Smaller denominations frequently include images of people wearing traditional clothing. Most coins' reverse sides, which come in denominations from 1 fen to 1 renminbi, include pictures of the nation's varied landscape and historic structures. In 1969, the currency's official name, the renminbi, was adopted.

The renminbi gained popularity as a reserve currency as China climbed to prominence as one of the world's foremost centers of trade and finance in the early 21st century. The International Monetary Fund (IMF) declared the renminbi to be one of its reserve currencies in November 2015 in acknowledgment of the renminbi's heightened status. 

As a result, it would be included in the list of currencies with Special Drawing Rights (SDRs) utilized by the IMF for intergovernmental loans, along with the US dollar, the euro, the British pound sterling, and the Japanese yen. Late in 2016, the renminbi's status changed.

Because of the Chinese government's strict regulations, the Chinese Yuan has never come close to being regarded as a global currency. But as the Chinese government began to encourage the use of the RMB abroad, things started to shift.

China implements exchange rate restrictions to keep the Chinese Yuan's value stable. The PBOC establishes a midpoint rate each day against the dollar based on activity in recent trading sessions and changes in the global currency markets. Yuan trading is permitted to occur within 2% of that price. The midpoint may occasionally also be modified in response to vague "counter-cyclical" causes.

Some experts think that these restrictions maintain the yuan's artificial devaluation in order to boost the value of the nation's exports. The Chinese Yuan reached a 13-month low as a result of a developing trade war with the United States after the IMF stated in the summer of 2018 that it was in line with fundamentals.

If you are interested in more articles like this, here’s one about when the dollar became the world currency.

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