:''This article is about the currency. For other uses, see
Renminbi (disambiguation).''
The 'renminbi' () is the official
currency in the
mainland of the
People's Republic of China (PRC).
[1], whose principal unit is the 'yuan' (). It is issued by the
People's Bank of China, the monetary authority of the PRC.
[2] The official
ISO 4217 abbreviation is CNY, although also commonly abbreviated as "RMB". The Latinised symbol is
¥.
The two
special administrative regions,
Hong Kong and
Macau, have their own respective currencies. According to the
one country, two systems principle and the basic laws of the two territories,
[3] [4] national laws generally do not apply. Therefore, the
Hong Kong dollar and the
pataca remain the legal tenders in the two territories, and renminbi, although accepted, is not legal tender.
History
The renminbi was first issued by the
People's Bank of China in December 1948, about a year before the
Chinese Communist Party's victory in the
Chinese Civil War. One of the first tasks of the new communist government was to end the
hyperinflation that had plagued China near the end of the
Kuomintang (KMT) era. A revaluation occurred in 1955 at the rate of 1 new yuan =10,000 old yuan.
During the era of the
command economy, the value of the RMB was set to unrealistic values in exchange with western currency and severe currency exchange rules were put in place. With the opening of the mainland Chinese economy in 1978, a
dual track currency system was instituted, with renminbi usable only domestically, and with foreigners forced to use
foreign exchange certificates. The unrealistic levels at which
exchange rates were pegged led to a strong
black market in currency transactions.
In the late 1980s and early 1990s, the PRC worked to make the RMB more convertible. Through the use of
swap centers, the exchange rate was brought to realistic levels and the dual track currency system was abolished.
The RMB is convertible on
current accounts, but not
capital accounts. The ultimate goal has been to make the RMB fully convertible. However, partly in response to the
Asian financial crisis in
1998, the PRC has been concerned that the mainland Chinese financial system would not be able to handle the potential rapid cross border movements of
hot money, and as a result, as of 2007, the currency trades within a narrow bandwith specified by the Chinese central government.
Use outside mainland China
Under the
one country, two systems policy,
Hong Kong maintains a separate currency, the
Hong Kong dollar. The RMB is the second most popular currency in
Hong Kong and is becoming the principal trading currency in the region.
[5][6] Banks in Hong Kong allow people to maintain accounts in RMB.
[7]
Macau, with its own one country, two systems policy, maintains the separate
pataca as its currency. The RMB has always had a presence even before the 1999 return to the People's Republic of China from
Portugal. Banks in Macau can issue credit cards based on the renminbi, but not loans. Renminbi based credit cards can not be used in Macau's
casinos.
[8]
Use of the renminbi in
Taiwan is illegal. The
Republic of China government believes wide usage of the renminbi would create an
underground economy and undermine its
sovereignty.
[9] Tourists are allowed to bring in up to 20,000 renminbi when visiting Taiwan. These renminbi must be converted to the
New Taiwan dollar at trial exchange sites in
Matsu and
Kinmen.
[10] Taiwan insists that it will not allow full
convertibility until the mainland signs a bilateral foreign exchange settlement agreement.
[11]
In
Mongolia, the RMB occupies 60% of the local cash circulation.
Cambodia and
Nepal welcome the renminbi as an official currency and
Laos and
Myanmar allow it in border provinces. Though unofficial,
Vietnam recognizes the exchange of renminbi to
đồng.
[12]
Yuan and other renminbi units
The base unit of the renminbi is the ''
yuan''. As with
Chinese numerals, this character has two forms — a common simplified form (元) and a formal form (圆/圓) used to prevent alterations and accounting mistakes.
''Yuan'' is a one syllable word and in
Chinese literally means ''round'', after the round shape of ancient Chinese coins by the same name. The
Korean and
Japanese currency names, ''
won'' and ''
yen'' respectively, are
cognates of the ''yuan'' and have the same
Chinese character (
hanja/
kanji) representation, but in different forms (respectively, 원/圓 and 円/圓), also meaning ''round'' in
Korean and
Japanese. However, they do not share the same names for the subdivisions (''fen'', ''jiao'').
One ''yuan'' is divided into 10 ''jiao'' (角), and one ''jiao'' is divided into 10 ''fen'' (分). So 3.45 yuan would be spoken of as "3 ''yuan'' 4 ''jiao'' 5 ''fen''", as opposed to "3 ''yuan'' 45 ''fen''". Other names are often used colloquially; see ''
yuan'' for details. ''Yuan'' is also commonly translated into English simply as the "dollar."
Chinese price sticker (€ 1)
Although shop prices in the PRC are usually marked with 元 after the digits, a Y with one or two crossbars (¥) before the numeral digits is also common. Some people using an American keyboard may type CN$ out of convenience, for the ¥ symbol.
The largest denomination of the renminbi is the 100-''yuan''
note. The smallest is the 1-''fen''
coin or note. All denominations are available as banknotes. The ''fen'' notes are now rather insignificant, and the design has not changed since
1953. Since
sales tax in China are included in the prices, the ''fen'' and ''jiao'' have become increasingly unnecessary as prices increase. Chinese retail prices also tend to avoid decimal values (such as $9.98), opting instead for integer values of ''yuan'' (such as ¥9 or ¥10).
[13]
RMB series
The denomination of each banknote is given in
Chinese. The numbers themselves are given in financial
Chinese numeral characters, as well as
Arabic numerals. The denomination and the words 'China People's Bank' are also given in
Mongol,
Tibetan,
Uyghur and
Zhuang on the back of each banknote. On the front of the note is also the representation of the denomination in Chinese
Braille starting from the fourth series.
The use of coins varies from place to place. For example, coins are more often used for values less or equal to ¥1 in
Shanghai, but banknotes of the lower value are more often used than coins in
Beijing.
First series
Main articles: First series of the renminbi
The first series of Renminbi banknotes was introduced during the
Chinese Civil War by the newly-founded
People's Bank of China on
December 1,
1948, nearly one year before the founding of the
People's Republic of China itself.
The notes were issued in 12 denominations: ¥1, ¥5, ¥10, ¥20, ¥50, ¥100, ¥200, ¥500, ¥1,000, ¥5,000, ¥10,000 and ¥50,000, with a total of 62 designs. They were officially withdrawn on various dates between
April 1,
1955 to
May 10,
1955.
Second series
Main articles: Second series of the renminbi
The second series of Renminbi banknotes was introduced since
March 1,
1955. Together with the introduction of the second series, the decimal point was moved 4 places to the left. As a result, one first series ¥10,000 note is equivalent to one second series ¥1 note.
Each note has the words "People's Bank of China" as well as the denomination in the
Uyghur,
Tibetan,
Mongol and
Zhuang languages on the back, which has since appeared in each series of renminbi notes.
The denominations available in banknotes were ¥0.01, ¥0.02, ¥0.05, ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥3, ¥5, ¥10.
The denominations available in coins were ¥0.01, ¥0.02, ¥0.05.
Third series
Main articles: Third series of the renminbi
The third series of renminbi banknotes was introduced since
April 15,
1962. For the next two decades, the second and third series banknotes were used concurrently.
The denominations available in banknotes were ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10
The issuance of coins (¥0.1, ¥0.2, ¥0.5, and ¥1) began in 1980.
The third series was phased out over the 1990s and then was recalled completely on
July 1,
2000, a date valid for all of the denominations with only one date provided.
Fourth series
Main articles: Fourth series of the renminbi
The fourth series was introduced between 1987 and
1997, although the banknotes were dated
1980,
1990, or
1996. Unlike the third series, they are still legal tender. Banknotes are available in:
¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10, ¥50, ¥100
and newly designed coins of ¥0.1, ¥0.5, and ¥1.
Fifth series
Main articles: Fifth series of the renminbi
In 1999, a new series of renminbi banknotes and coins was progressively introduced. The fifth series consists of coins of ¥0.1, ¥0.5, and ¥1 and banknotes of ¥1, ¥5, ¥10, ¥20, ¥50, ¥100
Possible future design
On
March 13,
2006, some delegates to an advisory body at the
National People's Congress proposed to include
Sun Yat-sen and
Deng Xiaoping on the renminbi banknotes. However, the proposal is a long way from becoming law.
[14]
Exchange rate
China's currency, which for the previous decade had been tightly pegged at 8.28 renminbi to the
U.S. dollar, was revalued on
July 21,
2005 to 8.11 per U.S. dollar, following the removal of the peg to the US dollar and pressure from the United States. The People's Bank of China also announced that the renminbi would be pegged to a
basket of foreign currencies, rather than being strictly tied to the U.S. dollar, and would be allowed to float trade within a narrow 0.3% daily band against this basket of currencies. The PRC has stated that the basket is dominated by the
U.S. dollar,
Euro,
Japanese yen and
South Korean won, with a smaller proportion made up of the
British pound,
Thai baht,
Russian ruble,
Australian dollar,
Canadian dollar and
Singapore dollar.
As of
August 29,
2007 the renminbi traded at 7.5505 yuan per U.S. dollar which is a 9.7% increase since the removal of the peg. There are frequent suggestions that the yuan is undervalued, often on the basis of
purchasing power parity analysis (see
below). However, some studies suggest that the yuan is not in fact undervalued
[15].
Purchasing power parity
The
World Bank estimated (in
''World Development Indicators 2006'') that, by
purchasing power parity, one
United States dollar was equivalent to approximately ¥1.9 in
2004.
The
International Monetary Fund estimated (in
&pr1.x=62&pr1.y=9 ''World Economic Outlook Database, April 2007'') that, by
purchasing power parity, one
United States dollar was equivalent to approximately ¥2.021 in
2004, ¥2.047 in
2005, ¥2.062 in
2006, and is expected to be equivalent to approximately ¥2.095 in
2007.
See also
★
Chinese lunar coins
★
Economy of the People's Republic of China
References
1. Article 16, The People's Bank of China Law of the People's Republic of China .
2. Article 2, The People's Bank of China Law of the People's Republic of China
3. The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China
4. The Basic Law of the Macao Special Administrative Region of the People's Republic of China
5. Chinese Renminbi: Strong Currency in Asia
6. China's renminbi goes global
7. Hong Kong banks to conduct personal renminbi business on trial basis
8. Macao gets green light for RMB services
9. Regular Press Briefing of the Mainland Affairs Council
10. CBC head urges immediate liberalization of reminbi conversion
11. Taiwan prepares to allow renminbi exchange
12. RMB increases its influence in neighboring areas
13. Do you get one fen change at Origus?
14. China mulls Mao banknote change Quentin Sommerville
15. The US as the Leading Currency Manipulator Henry C.K. Liu, Global Research, February 16, 2007
External links
★
SinoBanknote
★
How to detect counterfeit Chinese money
★
Photographs of all Chinese currency and sound of pronunciation in Chinese
★
What is the new Chinese currency regime?
★
RMB current exchange rate and historical graphs
★
Economist article on Chinese currency valuation
★
Discussion on how the basket peg works
★
Chinese Bill Tracking
News
★
China Severs Its Currency's Link to Dollar,
Washington Post,
21 July 2005
★
China lifts currency basket lid, BBC,
10 August 2005
★
1, 2 and 5 fen banknotes to be withdrawn, from Xinhua online.
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