Introduction
The people of China have sufficient knowledge about the differences between Yuan and Renminbi. But for tourists or outsiders, it’s a very common question. It is the most frequently asked question among them. We will further discuss the differences between Yuan and Renminbi in this article.
“Renminbi” and “yuan” are identical things. “RMB” is the shortened form for “renminbi”. This is also known as the “people’s money.” The Renminbi is the official currency of the People’s Republic of China (PRC). People’s Bank of China has issued this in China. Officially, it is used in mainland China. The Renminbi is not lawful tender in Macau and Hong Kong. In Mandarin Chinese, the character yuan is used for round or circular things.
Yuan vs. Renminbi
Renminbi and yuan are often used correspondently. The renminbi is the official currency of the People's Republic of China. It indicates "people's currency" in Mandarin. A unit of currency is a Yuan. A famous resemblance draws from the British pound sterling vs. the pound. The renminbi is the name of China's currency. Similarly, the sterling is the currency of Great Britain. A unit of the renminbi is a yuan. Similarly, the basic unit of sterling is the pound. When shopping in China, a storekeeper might also represent prices in terms of kuai. This translates into "pieces,". Apart from this, it is the same way as Americans use the word "bucks" to denote dollars. CNY stands for Chinese Yuan under the ISO 4217 standard. Even though, RMB is frequently used as an unofficial abbreviation. Additionally, the Chinese Yuan may trade for a different price in offshore markets (such as Hong Kong) because of China's cross-border currency controls. To differentiate between these two prices, the unofficial abbreviation CNH is sometimes used to indicate the offshore price of the Chinese Yuan. The yuan is the name of the unit in which renminbi transactions are termed. Though, the Yuan also refers to the currency. In this way, a person might pay for a meal using a 20 yuan banknote. Therefore, he will get some yuan and jiao (a tenth of a yuan) in change (the jiao is further divided into 10 fens). However, it is all renminbi. This is analogous to the pound sterling (the name of the British currency). Whereas, the price of a pint of beer in a London pub would be expressed just in pounds. Technologically, the yuan is the unit of account of the renminbi. Even though, it is also used to refer to the Chinese currency. The renminbi is often called the “redback” by Western media. A play on “greenback”. This is used informally to narrate the US dollar. The primary unit of the currency of China is the yuan. Along with this, the base unit of the currency of China is the yuan. To elaborate it better, we can say that the Renminbi is like the USD. On the other hand, the yuan is like the dollar. China’s central bank belittled its currency, sending major stock markets in Asia and Europe down. For over 20 years, It is the largest devaluation in China’s system. When going through the news and examine of this event, you might have a look at both terms— “renminbi” and “yuan”—used interchangeably. There is no dissimilarity. The renminbi is the official currency of the People’s Republic of China. The Renminbi interprets as “people’s money.” Renminbi’s international symbol is CNY (or CNH in Hong Kong). Though, the Renminbi is abbreviated RMB, with the symbol ¥.
Differences between Yuan and Renminbi in Tabular Form
| Parameters of Comparison | Yuan | Renminbi |
| Definition | Yuan is a ‘round coin’, the basic monetary unit of the currency of China. | The Renminbi is the system of currency of the People’s Republic of China (PRC). |
| Major difference | The yuan is the main unit of the Renminbi. | The renminbi (RMB) is the official name for China’s currency. |
| Usage | Yuan is also used with the names of few other currencies like Hong Kong Dollar, Singapore Dollar, the New Taiwan Dollar, or the Macanese Pacata. | The Renminbi is not lawful tender in Macau and Hong Kong. |
| Value in dollar | One Chinese yuan is worth 14.9 U.S. cents, as of July 5, 2022. | One dollar is worth 6.719 yuan renminbi as of July 5, 2022. |
| Year of Establishment | The central government started issuing its coins in the yuan currency system in 1903. | The People’s Bank of China introduced the Renminbi in December 1948. |
Key Points
- The Chinese Yuan and Renminbi are interchangeable terms for China's currency.
- The official name of China's currency is Renminbi (RMB). The key unit of RMB is known as the Chinese Yuan (CNY).
- CNY is the official ISO 4217 shortened form for China's currency. CNH is frequently used as an unofficial abbreviation for the price of yuan in offshore markets.
- The yuan character is also used in the names of other currencies. These currencies are- the New Taiwan Dollar, Hong Kong Dollar, Singapore Dollar, or the Macanese Pacata.
- The renminbi has been added to the list of the top-five most-used currencies. It was a part of the IMF’s Special Drawing Rights basket.
What is Yuan (CNY)?
The character yuan is used for round or circular things in Mandarin Chinese. This word was also utilized for the silver Spanish dollars initiated by European merchants in the seventeenth and eighteenth centuries. In 1889, China began to stamp its silver yuan coins. Both the Qing Dynasty and early Republican government minted silver yuan coins and banknotes. Today, the conventional character for yuan is also used in the currencies of several Chinese-speaking regions. The regions are- the New Taiwan Dollar, the Hong Kong Dollar, the Singaporean Dollar, and the Macanese Pacata.
The modern-day Chinese Yuan uses the shortened form of CNY to differentiate between the mainland currency with other uses of the word. Forex brokers, for instance, will quote prices with the ticker CNY.
100 yuan is the largest banknote, followed by 50 yuan, 20 yuan, 10 yuan, 5 yuan, and 1 yuan. One yuan can be divided into jiao and fen. There is 10 jiao in a yuan (like dimes in a dollar). Also, there are 10 fens in a jiao.
The word "yuan" is often used in Mandarin translations of foreign currencies. The U.S. dollar, for instance, is translated as mei yuan.
Why Are There Different Yuan Exchange Rates?
China’s currency system is sophisticated. This is because the PBOC charges strict capital controls to restrict the flow of foreign capital in and out of the country. A withdrawal of outflows in a crisis could flame a stampede of the yuan. Up until 1994, yuan settlement for commerce was not allowed outside China. In that year, authorities permitted Chinese entities to trade the yuan in exchange for US dollars for imports of goods and services. Since that time, China has made its current account more liberal and permitted freer flows.
What is Renminbi (RMB)?
Throughout the Chinese Civil War, the communist party set up the People’s Bank of China. The party delivered the first renminbi notes in December 1948. About a year ago, it conquered the Kuomintang government.
The new currency permitted the new administration to merge the Chinese economy. It was then divided among several regional currencies. It also separated the new administration from the previous government, whose plans had caused high levels of hyperinflation. In 1955, the RMB was reassessed at a rate of 10,000 to one. It signifies that each yuan in the new series replaced 10,000 old yuan. One Chinese yuan can be divided into 10 jiao or 100 fens. “RMB” is the shortened form for “renminbi”. This is also termed the “people’s money.”
Throughout the command economy, the value of the RMB was rigidly controlled, with one yuan pegged at 2.46 yuan to the U.S. dollar until 1971. As the Chinese economy opened to the world market, the PBOC permitted the yuan to trade in international markets. Although, the floating exchange rate was still rigidly controlled.
Main Differences between Yuan and Renminbi in Points
The key differences between Yuan and Renminbi are mentioned below:
- The renminbi is the official currency of the People's Republic of China. It indicates "people's currency" in Mandarin. A unit of currency is a Yuan.
- Renminbi and yuan are frequently used correspondently. When shopping in China, a storekeeper might also represent prices in terms of kuai. This translates into "pieces,". Besides this, it is also similar to how Americans use "bucks" to mean dollars.
- RMB is frequently used as an unofficial abbreviation. Additionally, the Chinese Yuan may trade for a different price in offshore markets (such as Hong Kong) because of China's cross-border currency controls. To differentiate between these two prices, the unofficial abbreviation CNH is sometimes used to indicate the offshore price of the Chinese Yuan.
- The yuan is the name of the primary unit in which renminbi transactions are termed. “RMB” is also termed as the “people’s money.”
- The central government began to put forth its coins in the yuan currency system in 1903. Conversely, The People’s Bank of China introduced the Renminbi in December 1948.
- It can be said that the Renminbi is like the USD. On a contrary, the yuan is like the dollar.
Special Considerations
For years, the Chinese Yuan had never been close to being regarded as an international currency. It is because of the Chinese government's rigid controls. Even though, this then started to alter as the Chinese government began to promote the international use of the RMB.
China uses currency controls to regulate the value of the Chinese Yuan at an advantageous level. Every day the PBOC puts down a midpoint value against the U.S. dollar, formulated on prior trading sessions and movements in international currency markets. The price of the yuan is permitted to trade within 2% of that price. Sometimes, the midpoint may also be modified based on unspecified "counter-cyclical" components.
Some economists trust that these controls maintain the yuan artificially devalued to make the country's exports more enchanting. In the summer of 2018, the International Monetary Fund (IMF) notified that the Chinese Yuan complied with fundamentals. Only to then witness the yuan reach a 13-month low in reaction to an escalating tariff war with the United States.
Today, the RMB is one of the top-five most-used currencies, in addition to the U.S. dollar, euro, yen, and British pound. In 2022, the International Monetary Fund augmented the weight of the yuan in its Special Drawing Rights basket. It is an international reserve asset that the IMF generated as an addition to member countries’ official reserves.
The Chinese Yuan started to lose value throughout the COVID-19 pandemic, The reason behind this is the reduction in economic activity and strict lockdowns. In April of 2022, the yuan faced its largest-ever monthly price drop. Then, over a period of three months, it lost 7% of its value.
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How Many Renminbi Make Up One Dollar?
As of July 5, 2022, one dollar is worth 6.719 yuan renminbi.
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How Much Worth Is of Is One Chinese Yuan?
As of July 5, 2022, one Chinese yuan is worth 14.9 U.S. cents.
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How Do You Purchase Digital Yuan?
The digital yuan, or e-CNY, is only accessible to users of specific banks in certain Chinese cities. As of April of 2022, the digital yuan app is accessible in 23 Chinese cities. The digital yuan can be bought through seven Chinese banks and the online payment services WeChat and Alipay. Additionally, only Chinese citizens can purchase digital yuan.
The Bottom Line
The development of the Chinese currency is often a roller coaster. China has augmented its attempts to back its currency. These are including promoting free usage of the renminbi. Even if you know it as a yuan or renminbi, the main thing is that the currency from China remains a central portion of the world economy.
Conclusion
Well, we have discussed the contrasts between ‘Yuan’ and ‘Renminbi’. Hope you got a clear understanding of the topic. For further information, tell us by commenting down below.
