Theyuan (元) is the basic unit of the renminbi. One yuan is divided into 10jiao (角), and the jiao is further subdivided into 10fen (分). The wordyuan is widely used to refer to the Chinese currency generally, especially in international contexts.[b]
Until 2005, the value of the renminbi waspegged to theUS dollar. As China pursued itstransition fromcentral planning to amarket economy and increased its participation in foreign trade, the renminbi wasdevalued to increase thecompetitiveness of Chinese industry. It has previously been claimed that the renminbi's officialexchange rate was undervalued by as much as 37.5% against itspurchasing power parity.[5] However, more recently,appreciation actions by the Chinese government, as well asquantitative easing measures taken by the AmericanFederal Reserve and other majorcentral banks, have caused the renminbi to be within as little as 8% of itsequilibrium value by the second half of 2012.[6] Since 2006, the renminbi exchange rate has been allowed tofloat in a narrow margin around a fixed base rate determined with reference to abasket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. As a result of the rapidinternationalization of the renminbi, it became the world's 8th most traded currency in 2013,[7] 5th by 2015,[8] but 6th in 2019.[9]
On 1 October 2016, the renminbi became the firstemerging market currency to be included in theIMF'sspecial drawing rights basket, the basket of currencies used by the IMF as a reserve currency.[10] Its initial weighting in the basket was 10.9%.[11]: 259
TheISO code for the renminbi isCNY, the PRC's country code (CN) plus "Y" from "yuan".[13]Hong Kong markets that trade renminbi at free-floating rates use the unofficial codeCNH. This is to distinguish the rates from those fixed by Chinese central banks on the mainland.[14] The abbreviationRMB is not an ISO code but is sometimes used like one by banks and financial institutions.
Renminbi is the name of the currency whileyuan is the name of the primary unit of the renminbi. This is analogous to the distinction between "sterling" and "pound" when discussing the official currency of theUnited Kingdom.[13]Jiao andfen are also units of renminbi.
Parts of this article (those related to images of new issuance of coins and banknotes (seezh:第五套人民币#第三版)) need to beupdated. Please help update this article to reflect recent events or newly available information.(September 2021)
The various currencies calledyuan or dollar issued inmainland China as well asTaiwan,Hong Kong,Macau andSingapore were all derived from theSpanish dollar, which China imported in large quantities fromSpanish America from the 16th to 20th centuries. The first locally minted silver dollar or yuan accepted all overQing dynasty China (1644–1912) was thesilver dragon dollar introduced in 1889. Various banknotes denominated in dollars or yuan were also introduced, which were convertible to silver dollars until 1935 when thesilver standard was discontinued and theChinese yuan was madefabi (法币; legal tenderfiat currency).
The renminbi was introduced by thePeople's Bank of China in December 1948, about a year before the establishment of the People's Republic of China. It was issued only in paper form at first, and replaced the various currencies circulating in the areas controlled by theCommunists. One of the first tasks of the new government was to end thehyperinflation that had plagued China in the final years of theKuomintang (KMT) era. That achieved, a revaluation occurred in 1955 at the rate of 1 new yuan = 10,000 old yuan.
As theChinese Communist Party took control of ever larger territories in the latter part of theChinese Civil War, itsPeople's Bank of China began to issue a unified currency in 1948 for use in Communist-controlled territories. Also denominated inyuan, this currency was identified by different names, including "People's Bank of China banknotes" (simplified Chinese:中国人民银行钞票;traditional Chinese:中國人民銀行鈔票; from November 1948), "New Currency" (simplified Chinese:新币;traditional Chinese:新幣; from December 1948), "People's Bank of China notes" (simplified Chinese:中国人民银行券;traditional Chinese:中國人民銀行券; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or "renminbi", from June 1949.[16]
From 1949 until the late 1970s, the state fixed China's exchange rate at a highly overvalued level as part of the country'simport-substitution strategy. During this time frame, the focus of the state's central planning was to accelerate industrial development and reduce China's dependence on imported manufactured goods. The overvaluation allowed the government to provide imported machinery and equipment to priority industries at a lower domestic currency cost than otherwise would have been possible.[citation needed]
China's transition by the mid-1990s to a system in which the value of its currency was determined by supply and demand in aforeign exchange market was a gradual process spanning 15 years that involved changes in the official exchange rate, the use of adual exchange rate system, and the introduction and gradual expansion of markets for foreign exchange.[citation needed]
The most important move to a market-oriented exchange rate was an easing of controls on trade and other current account transactions, as occurred in several very early steps. In 1979, theState Council approved a system allowing exporters and their provincial and local government owners to retain a share of their foreign exchange earnings, referred to as foreign exchange quotas. At the same time, the government introduced measures to allow retention of part of the foreign exchange earnings from non-trade sources, such as overseas remittances, port fees paid by foreign vessels, and tourism.[citation needed]
As early as October 1980, exporting firms that retained foreign exchange above their own import needs were allowed to sell the excess through the state agency responsible for the management of China's exchange controls and its foreign exchange reserves, the State Administration of Exchange Control. Beginning in the mid-1980s, the government sanctioned foreign exchange markets, known as swap centres, eventually in most large cities.[citation needed]
The government also gradually allowed market forces to take the dominant role by introducing an "internal settlement rate" of ¥2.8 to 1 US dollar which was a devaluation of almost 100%.[citation needed]
In the process of opening up China to external trade and tourism, transactions with foreign visitors between 1980 and 1994 were done primarily usingForeign exchange certificates (外汇券,waihuiquan) issued by theBank of China.[17][18][19] Foreign currencies were exchangeable for FECs and vice versa at the renminbi's prevailing official rate which ranged from US$1 = ¥2.8 FEC to ¥5.5 FEC. The FEC was issued as banknotes from ¥0.1 to ¥100, and was officially at par with the renminbi. Tourists used FECs to pay for accommodation as well as tourist and luxury goods sold inFriendship Stores. However, given the non-availability of foreign exchange and Friendship Store goods to the general public, as well as the inability of tourists to use FECs at local businesses, an illegalblack market developed for FECs where touts approached tourists outside hotels and offered over ¥1.50 RMB in exchange for ¥1 FEC. In 1994, as a result of foreign exchange management reforms approved by the14th Central Committee of the Chinese Communist Party, the renminbi was officially devalued from US$1 = ¥5.5 to over ¥8, and the FEC was retired at ¥1 FEC = ¥1 RMB in favour of tourists directly using the renminbi.[citation needed]
In November 1993, the Third Plenum of the 14th Central Committee of the Chinese Communist Party approved a comprehensive reform strategy in which foreign exchange management reforms were highlighted as a key element for a market-oriented economy. A floating exchange rate regime and convertibility for renminbi were seen as the ultimate goal of the reform. Conditional convertibility under current account was achieved by allowing firms to surrender their foreign exchange earning from current account transactions and purchase foreign exchange as needed. Restrictions onForeign Direct Investment (FDI) was also loosened and capital inflows to China surged.[citation needed]
During the era of thecommand economy, the value of the renminbi was set to unrealistic values in exchange with Western currency and severe currency exchange rules were put in place, hence the dual-track currency system from 1980 to 1994 with the renminbi usable only domestically, and withForeign Exchange Certificates (FECs) used by foreign visitors.[citation needed]
In the late 1980s and early 1990s, China worked to make the renminbi more convertible. Through the use of swap centres, the exchange rate was eventually brought to more realistic levels of above ¥8/US$1 in 1994 and the FEC was discontinued. It stayed above ¥8/$1 until 2005 when the renminbi's peg to the dollar was loosened and it was allowed to appreciate.[citation needed]
As of 2013, the renminbi is convertible oncurrent accounts but notcapital accounts. The ultimate goal has been to make the renminbi fully convertible. However, partly in response to theAsian financial crisis in 1998, China has been concerned that the Chinese financial system would not be able to handle the potential rapid cross-border movements ofhot money, and as a result, as of 2012, the currency trades within a narrow band specified by the Chinese central government.[citation needed]
Following theinternationalization of the renminbi, on 30 November 2015, theIMF voted to designate the renminbi as one of several main world currencies, thus including it in the basket ofspecial drawing rights. The renminbi became the first emerging market currency to be included in the IMF's SDR basket on 1 October 2016.[10] The other main world currencies are thedollar, theeuro,sterling, and theyen.[20]
In October 2019, China's central bank,PBOC, announced that adigital renminbi was going to be released after years of preparation.[21] This version of the currency, also called DCEP (Digital Currency Electronic Payment),[22] can be “decoupled” from the banking system to give visiting tourists a taste of the nation's burgeoningcashless society.[23] The announcement received a variety of responses: some believe it is more about domestic control and surveillance.[24] Some argue that the real barriers to internationalisation of the renminbi are China's capital controls, which it has no plans to remove. Maximilian Kärnfelt, an expert at theMercator Institute for China Studies, said that a digital renminbi "would not banish many of the problems holding the renminbi back from more use globally". He went on to say, "Much of China's financial market is still not open to foreigners andproperty rights remain fragile."[25]
The PBOC has filed more than 80 patents surrounding the integration of adigital currency system, choosing to embrace theblockchain technology. The patents reveal the extent of China's digital currency plans. The patents, seen and verified by theFinancial Times, include proposals related to the issuance and supply of a central bank digital currency, a system for interbank settlements that uses the currency, and the integration of digital currency wallets into existing retail bank accounts. Several of the 84 patents reviewed by theFinancial Times indicate that China may plan toalgorithmically adjust the supply of a central bank digital currency based on certain triggers, such as loaninterest rates. Other patents are focused on building digital currencychip cards or digital currency wallets that banking consumers could potentially use, which would be linked directly to their bank accounts. The patent filings also point to the proposed ‘tokenomics’ being considered by the DCEP working group. Some patents show plans towards programmed inflation control mechanisms. While the majority of the patents are attributed to the PBOC's Digital Currency Research Institute, some are attributed to state-owned corporations or subsidiaries of the Chinese central government.[26]
Uncovered by theChamber of Digital Commerce (an American non-profit advocacy group), their contents shed light on Beijing's mounting efforts to digitise the renminbi, which has sparked alarm in the West and spurred central bankers around the world to begin exploring similar projects.[26] Some commentators have said that the U.S., which has no current plans to issue a government-backed digital currency, risks falling behind China and risking its dominance in the global financial system.[27]Victor Shih, a China expert and professor at theUniversity of California San Diego, said that merely introducing a digital currency "doesn't solve the problem that some people holding renminbi offshore will want to sell that renminbi and exchange it for the dollar", as the dollar is considered to be a safer asset.[28]Eswar Prasad, an economics professor atCornell University, said that the digital renminbi "will hardly put a dent in the dollar's status as the dominant global reserve currency" due to the United States' "economic dominance, deep and liquid capital markets, and still-robust institutional framework".[28][29] The U.S. dollar's share as areserve currency is above 60%, while that of the renminbi is about 2%.[28]
In April 2020,The Guardian reported that the digital currencye-RMB had been adopted into multiple cities' monetary systems and "some government employees andpublic servants [will] receive their salaries in the digital currency from May.The Guardian quoted aChina Daily report which stated "A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption."[30] There were talks of testing out the digital renminbi in theBeijing Winter Olympics in 2022, but China's overall timetable for rolling out the digital currency was unclear.[31]
As of 2019, renminbi banknotes are available in denominations of ¥0.1, ¥0.5 (1 and 5 jiao), ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. These denominations have been available since 1955, except for the ¥20 notes (added in 1999 with the fifth series) ¥50 and ¥100 notes (added in 1987 with the fourth series). Coins are available in denominations from ¥0.01 to ¥1 (¥0.01–1). Thus some denominations exist in both coins and banknotes. On rare occasions, larger yuan coin denominations such as ¥5 have been issued to commemorate events but use of these outside of collecting has never been widespread.[citation needed]
The denomination of each banknote is printed insimplifiedwritten Chinese. The numbers themselves are printed in financial[c]Chinese numeral characters, as well asArabic numerals. The denomination and the words "People's Bank of China" are also printed inMongolian,Tibetan,Uyghur andZhuang on the back of each banknote, in addition to the boldfaceHanyu Pinyin "Zhongguo Renmin Yinhang" (without tones). The right front of the note has a tactile representation of the denomination inChinese Braille starting from the fourth series. Seecorresponding section for detailed information.[citation needed]
Thefen andjiao denominations have become increasingly unnecessary as prices have increased. Coins under ¥0.1 are used infrequently. Chinese retailers tend to avoid fractional values (such as ¥9.99), opting instead to round to the nearest yuan (such as ¥9 or ¥10).[34]
In 1953,aluminium ¥0.01, ¥0.02, and ¥0.05 coins began being struck for circulation, and were first introduced in 1955. These depict thenational emblem on theobverse (front) and the name and denomination framed bywheat stalks on the reverse (back). In 1980,brass ¥0.1, ¥0.2, and ¥0.5 andcupro-nickel ¥1 coins were added, although the ¥0.1 and ¥0.2 were only produced until 1981, with the last ¥0.5 and ¥1 issued in 1985. All jiǎo coins depicted similar designs to the fēn coins while the yuán depicted theGreat Wall of China.
In 1991, a new coinage was introduced, consisting of an aluminium ¥0.1, brass ¥0.5 andnickel-cladsteel ¥1. These were smaller than the previous jiǎo and yuán coins and depicted flowers on the obverse and the national emblem on the reverse. Issuance of the aluminium ¥0.01 and ¥0.02 coins ceased in 1991, with that of the ¥0.05 halting in 1994. The small coins were still struck for annualuncirculatedmint sets in limited quantities, and from the beginning of 2005, the ¥0.01 coin got a new lease on life by being issued again every year since then up to present.
New designs of the ¥0.1, ¥0.5 (now brass-plated steel), and ¥1 (nickel-plated steel) were again introduced in between 1999 and 2002. The ¥0.1 was significantly reduced in size, and in 2005 its composition was changed from aluminium to more durable nickel-plated steel. An updated version of these coins was announced in 2019. While the overall design is unchanged, all coins including the ¥0.5 are now of nickel-plated steel, and the ¥1 coin was reduced in size.[35][36]
The frequency of usage of coins varies between different parts of China, with coins typically being more popular in urban areas (with 5-jiǎo and 1-yuán coins used in vending machines), and small notes being more popular in rural areas. Older fēn and large jiǎo coins are uncommonly still seen in circulation, but are still valid in exchange.
As of 2023, there have been five series of renminbi banknotes issued by the People's Republic of China:[37][38][39][40]
Thefirst series of renminbi banknotes was issued on 1 December 1948, by the newly foundedPeople's Bank of China. It introduced notes in denominations of ¥1, ¥5, ¥10, ¥20, ¥50, ¥100 and ¥1,000 yuan. Notes for ¥200, ¥500, ¥5,000 and ¥10,000 followed in 1949, with ¥50,000 notes added in 1950. A total of 62 different designs were issued. The notes were officially withdrawn on various dates between 1 April and 10 May 1955. The name "first series" was given retroactively in 1950, after work began to design a new series.[16]
Thesecond series of renminbi banknotes was introduced on 1 March 1955 (but dated 1953). Each note has the words "People's Bank of China" as well as the denomination in theUyghur,Tibetan,Mongolian andZhuang 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 and ¥10. Except for the three fen denominations and the ¥3 which were withdrawn, notes in these denominations continued to circulate. Good examples of this series have gained high status with banknote collectors.
Thethird series of renminbi banknotes was introduced on 15 April 1962, though many denominations were dated 1960. New dates would be issued as stocks of older dates were gradually depleted. The sizes and design layout of the notes had changed but not the order of colours for each denomination. For the next two decades, the second and third series banknotes were used concurrently. The denominations were of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5 and ¥10. The third series was phased out during the 1990s and then was recalled completely on 1 July 2000.
Thefourth series of renminbi banknotes was introduced between 1987 and 1997, although the banknotes were dated 1980, 1990, or 1996. They were withdrawn from circulation on 1 May 2019. Banknotes are available in denominations of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10, ¥50 and ¥100. Like previous issues, the colour designation for already existing denominations remained in effect. The second to fourth series of renminbi banknotes were designed by professors at the Central Academy of Art includingLuo Gongliu and Zhou Lingzhao.
Thefifth series of renminbi banknotes and coins was progressively introduced from its introduction in 1999. This series also bears the issue years 2005 (all except ¥1), 2015 (¥100 only) and 2019 (¥1, ¥10, ¥20 and ¥50). As of 2019, it includes banknotes for ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. Significantly, the fifth series uses the portrait ofChinese Communist Party chairmanMao Zedong on all banknotes, in place of the various leaders, workers and representations of China's ethnic groups which had been featured previously. During this series new security features were added, the ¥2 denomination was discontinued, the colour pattern for each note was changed and a new denomination of ¥20 was introduced for this series. A revised series of coins of ¥0.1, ¥0.5 and ¥1 and banknotes of ¥1, ¥10, ¥20 and ¥50 were issued for general circulation on 30 August 2019. The ¥5 banknote of the fifth series was issued in November 2020 with new printing technology in a bid to reduce counterfeiting of Chinese currency.
In 1999, a commemorative red ¥50 note was issued in honour of the 50th anniversary of the establishment of the People's Republic of China. This note featuresChinese Communist PartychairmanMao Zedong on the front and various animals on the back.
An orangepolymer note, commemorating the new millennium was issued in 2000 with a face value of ¥100. This features adragon on the obverse and the reverse features the China Millennium monument (at the Center for Cultural and Scientific Fairs).
For the2008 Beijing Olympics, a green ¥10 note was issued featuring theBird's Nest Stadium on the front with the back showing a classical Olympicdiscus thrower and various other athletes.
On 26 November 2015, the People's Bank of China issued a blue ¥100 commemorative note to honour China's aerospace science and technology.[42][43]
In commemoration of the 70th anniversary of the Renminbi, the People's Bank of China issued 120 million ¥50 banknotes on 28 December 2018.
In recognition of the imminent2022 Winter Olympics, the People's Bank of China issued ¥20 commemorative banknotes in both paper and polymer in December 2021.
In recognition of the imminent 2024 and 2025Chinese New Year celebrations, the People's Bank of China issued ¥20 commemorative banknotes in polymer
The renminbi yuan has different names when used in ethnic minority regions of China.
When used inInner Mongolia and otherMongol autonomies, a yuan is called atugreg (Mongolian:ᠲᠦᠭᠦᠷᠢᠭ᠌, төгрөгtügürig). However, when used in the republic ofMongolia, it is still namedyuani (Mongolian:юань) to differentiate it fromMongolian tögrög (Mongolian:төгрөг). One Chinese tügürig (tugreg) is divided into 100mönggü (Mongolian:ᠮᠥᠩᠭᠦ, мөнгө), one Chinese jiao is labeled "10 mönggü". InMongolian, renminbi is calledaradin jogos orarad-un jogos (Mongolian:ᠠᠷᠠᠳ ᠤᠨ ᠵᠣᠭᠣᠰ, ардын зоосarad-un ǰoγos).
When used inTibet and otherTibetan autonomies, a yuan is called agor (Tibetan:སྒོར་,ZYPY:Gor). One gor is divided into 10gorsur (Tibetan:སྒོར་ཟུར་,ZYPY:Gorsur) or 100gar (Tibetan:སྐར་,ZYPY:gar). InTibetan, renminbi is calledmimangxogngü (Tibetan:མི་དམངས་ཤོག་དངུལ།,ZYPY:Mimang Xogngü) ormimang shog ngul.
When used in the Uyghur autonomous region ofXinjiang, the renminbi is calledXelq puli (Uyghur:خەلق پۇلى)
Renminbi currency production is carried out by a state owned corporation,China Banknote Printing and Minting Corporation (CBPMC;中国印钞造币总公司) headquartered inBeijing.[44] CBPMC uses several printing, engraving andminting facilities around the country to produce banknotes and coins for subsequent distribution. Banknote printing facilities are based in Beijing,Shanghai,Chengdu,Xi'an,Shijiazhuang, andNanchang. Mints are located inNanjing, Shanghai, andShenyang. Also, high grade paper for the banknotes is produced at two facilities inBaoding and Kunshan. The Baoding facility is the largest facility in the world dedicated to developing banknote material according to its website.[45] In addition, thePeople's Bank of China has its own printing technology research division that researches new techniques for creating banknotes and making counterfeiting more difficult.
For most of its early history, the renminbi waspegged to the U.S. dollar at ¥2.46 per dollar. During the 1970s, it was revalued until it reached ¥1.50 per dollar in 1980. When China's economy gradually opened in the 1980s, the renminbi was devalued in order to improve the competitiveness of Chinese exports. Thus, the official exchange rate increased from ¥1.50 in 1980 to ¥8.62 by 1994 (the lowest rate on record). Improving current account balance during the latter half of the 1990s enabled the Chinese government to maintain a peg of ¥8.27 per US$1 from 1997 to 2005.
The renminbi reached a record high exchange value of ¥6.0395 to the US dollar on 14 January 2014.[49] Chinese leadership have been raising the yuan to tame inflation, a step U.S. officials have pushed for years to lower the massive trade deficit with China.[50] Strengthening the value of the renminbi also fits with the Chinese transition to a more consumer-led economic growth model.[51]
In 2015 thePeople's Bank of China again devalued their country's currency. As of 1 September 2015[update], the exchange rate for US$1 is ¥6.38.
On 21 July 2005, the peg was finally lifted, which saw an immediate one-time renminbi revaluation to ¥8.11 per dollar.[52] The exchange rate against theeuro stood at ¥10.07060 per euro.
However, the peg was reinstituted unofficially when the financial crisis hit: "Under intense pressure from Washington, China took small steps to allow its currency to strengthen for three years starting in July 2005. But China 're-pegged' its currency to the dollar as the financial crisis intensified in July 2008."[53]
On 19 June 2010, the People's Bank of China released a statement simultaneously in Chinese and English claiming that they would "proceed further with reform of the renminbi exchange rate regime and increase the renminbi exchange rate flexibility".[54] The news was greeted with praise by world leaders includingBarack Obama,Nicolas Sarkozy andStephen Harper.[55] ThePBoC maintained there would be no "large swings" in the currency. The renminbi rose to its highest level in five years and markets worldwide surged on Monday, 21 June following China's announcement.[56]
In August 2015, Joseph Adinolfi, a reporter forMarketWatch, reported that China had re-pegged the renminbi. In his article, he narrated that "Weak trade data out of China, released over the weekend, weighed on the currencies of Australia and New Zealand on Monday. But the yuan didn't budge. Indeed, the Chinese currency, also known as the renminbi, has been remarkably steady over the past month despite the huge selloff in China's stock market and a spate of disappointing economic data. Market strategists, including Simon Derrick, chief currency strategist at BNY Mellon, and Marc Chandler, head currency strategist at Brown Brothers Harriman, said that is because China's policy makers have effectively re-pegged the yuan. “When I look at the dollar-renminbi right now, that looks like a fixed exchange rate again. They’ve re-pegged it,” Chandler said."[57]
On 10 April 2008, it traded at ¥6.9920 per US dollar, which was the first time in more than a decade that a dollar had bought less than ¥7,[63] and at ¥11.03630 per euro.
Beginning in January 2010, Chinese and non-Chinese citizens have an annual exchange limit of a maximum of US$50,000. Exchanges within this limit require only a passport or Chinese ID and no additional documentation showing the purpose of the exchange. Currency exchange transactions are centrally registered. The maximum dollar withdrawal is $10,000 per day, the maximum purchase limit of US dollars is $500 per day. This stringent management of the currency leads to a bottled-up demand for exchange in both directions. It is viewed as a major tool to keep the currency peg, preventing inflows of "hot money".
A shift of Chinese reserves into the currencies of their other trading partners has caused these nations to shift more of their reserves into dollars, leading to no great change in the value of the renminbi against the dollar.[64]
Renminbifutures are traded at theChicago Mercantile Exchange. The futures are cash-settled at the exchange rate published by the People's Bank of China.[65]
Scholarly studies suggest that the yuan is undervalued on the basis ofpurchasing power parity analysis. One 2011 study suggests a 37.5% undervaluation.[5]
TheInternational Monetary Fund estimated that, by purchasing power parity, one International dollar was equivalent to approximately ¥3.462 in 2006, ¥3.621 in 2007, ¥3.798 in 2008, ¥3.872 in 2009, ¥3.922 in 2010, ¥3.946 in 2011, ¥3.952 in 2012, ¥3.944 in 2013 and ¥3.937 in 2014.[67]
The People's Bank of China lowered the renminbi's daily fix to the US dollar by 1.9 per cent to ¥6.2298 on 11 August 2015. The People's Bank of China again lowered the renminbi's daily fix to the US dollar from ¥6.620 to ¥6.6375 afterBrexit on 27 June 2016. It had not been this low since December 2010.
On 24 November 2010,Vladimir Putin announced that Russia's bilateral trade with China would be settled inroubles and yuan, instead ofUS dollars.[68]
Before 2009, the renminbi had little to no exposure in the international markets because of strict government controls by the central Chinese government that prohibited almost all export of the currency, or use of it in international transactions. Transactions between Chinese companies and a foreign entity were generally denominated inUS dollars. With Chinese companies unable to hold US dollars and foreign companies unable to hold Chinese yuan, all transactions would go through thePeople's Bank of China. Once the sum was paid by the foreign party in dollars, the central bank would pass the settlement in renminbi to the Chinese company at the state-controlled exchange rate.
In June 2009 the Chinese officials announced a pilot scheme where business and trade transactions were allowed between limited businesses inGuangdong province andShanghai, and only counterparties inHong Kong,Macau, and selectASEAN nations. Proving a success,[69] the program was further extended to 20 Chinese provinces and counterparties internationally in July 2010, and in September 2011 it was announced that the remaining 11 Chinese provinces would be included.
In steps intended to establish the renminbi as an internationalreserve currency, China has agreements withRussia,Vietnam,Sri Lanka,Thailand, andJapan, allowing trade with those countries to be settled directly in renminbi instead of requiring conversion to US dollars, withAustralia andSouth Africa to follow soon.[70][71][72][73][74] In September 2023, the Renminbi passed the euro as the second most utilized currency in international trade, having tripled in the last three years.[75]
Currency restrictions regarding renminbi-denominated bank deposits and financial products were greatly liberalised in July 2010.[76] In 2010 renminbi-denominated bonds were reported to have been purchased by Malaysia's central bank[77] and thatMcDonald's had issued renminbi denominatedcorporate bonds throughStandard Chartered Bank of Hong Kong.[78] Such liberalisation allows the yuan to look more attractive as it can be held with higher return on investment yields, whereas previously that yield was virtually none. Nevertheless, some national banks such asBank of Thailand (BOT) have expressed a serious concern about renminbi since BOT cannot substitute the deprecated US dollars in its US$200 billion foreign exchange reserves for renminbi as much as it wishes because:
The Chinese government has not taken full responsibilities and commitments on economic affairs at global levels.
The renminbi still has not become well-liquidated (fully convertible) yet.
The Chinese government still lacks deep and wide vision about how to perform fund-raising to handle international loans at global levels.[79]
To meet IMF requirements, China gave up some of its tight control over the currency.[80]
Countries that are left-leaning in the political spectrum had already begun to use the renminbi as an alternative reserve currency to the United States dollar; theCentral Bank of Chile reported in 2011 to have US$91 million worth of renminbi in reserves, and the president of theCentral Bank of Venezuela, Nelson Merentes, made statements in favour of the renminbi following the announcement of reserve withdrawals from Europe and the United States.[81]
In Africa, the central banks of Ghana, Nigeria, and South Africa either hold renminbi as a reserve currency or have taken steps to purchase bonds denominated in renminbi.[82] The "Report on the Internationalization of RMB in 2020", which was released by the People's Bank of China in August 2020, said that renminbi's function as international reserve currency has gradually emerged. In the first quarter 2020, the share of renminbi in global foreign exchange reserves rose to 2.02%, a record high. As of the end of 2019, the People's Bank of China has set up renminbi clearing banks in 25 countries and regions outside of mainland China, which has made the use of renminbi more secure and transaction costs have decreased.[83]
The renminbi had a presence in Macau even before the 1999 return to the People's Republic of China fromPortugal. Banks in Macau can issue credit cards based on the renminbi, but not loans. Renminbi-based credit cards cannot be used in Macau'scasinos.[88]
The Republic of China, which governsTaiwan, believes wide usage of the renminbi would create anunderground economy and undermine itssovereignty.[89] Tourists are allowed to bring in up to ¥20,000 when visiting Taiwan. These renminbi must be converted toTaiwanese currency at trial exchange sites inMatsu andKinmen.[90] TheChen Shui-bian administration insisted that it would not allow fullconvertibility until the mainland signs a bilateral foreign exchange settlement agreement,[91] though presidentMa Ying-jeou, who served from 2008 to 2016, sought to allow full convertibility as soon as possible.
The renminbi circulates[92] in some of China's neighbors, such asPakistan,Mongolia[93][94] and northernThailand.[95]Cambodia welcomes the renminbi as an official currency andLaos andMyanmar allow it in border provinces such asWa andKokang and economic zones likeMandalay.[92] Though unofficial,Vietnam recognizes the exchange of the renminbi to theđồng.[92] In 2017 ¥215 billion was circulating inIndonesia. In 2018 a Bilateral Currency Swap Agreement was made by theBank of Indonesia and the Bank of China which simplified business transactions, and in 2020 about 10% ofIndonesia's global trade was in renminbi.[96]
Since 2007, renminbi-nominated bonds have been issued outside mainland China; these are colloquially called "dim sum bonds". In April 2011, the firstinitial public offering denominated in renminbi occurred in Hong Kong, when the Chinese property investment trustHui Xian REIT raised ¥10.48 billion ($1.6 billion) in its IPO.Beijing has allowed renminbi-denominated financial markets to develop in Hong Kong as part of the effort to internationalise the renminbi.[97] There is limited (under 1%) issuing of renminbi bonds in Indonesia.[96]
Since currency flows in and out of mainland China are still restricted, renminbi traded in off-shore markets, such as the Hong Kong market, can have a different value to renminbi traded on the mainland. The offshore RMB market is usually denoted as CNH, but there is another renminbi interbank and spot market in Taiwan for domestic trading known as CNT.
Other renminbi markets include the dollar-settled non-deliverable forward (NDF), and the trade-settlement exchange rate (CNT).[98][99]
Note that the two CNTs mentioned above are different from each other.[how?]
^A similar case arises withSterling, the currency of the United Kingdom. Its basic unit is thepound and the wordpound is widely used to refer to the British currency generally, especially in international contexts.
^A set of numeral characters used traditionally in financial and accounting settings, not used in daily writing; seeChinese numerals#Standard numbers
^The total sum is 200% because each currency trade is counted twice: once for the currency being bought and once for the currency being sold. The percentages above represent the proportion of all trades involving a given currency, regardless of which side of the transaction it is on.
^ab"中华人民共和国第一套人民币概述" [People's Republic of China first RMB Overview]. China: Sina.Archived from the original on 24 February 2021. Retrieved6 April 2012.
^Schwartz, Peter J. 'The Ideological Antecedents of the First-Series Renminbi Worker-and�Peasant Banknote or What Mao Tse-tung May Have Owed to Dziga Vertov’.Transcultural Studies, Jul 2014.
^Tim F. Liao and Cuntong Wang, 'The Changing Face of Money: Forging Collective Memory with Chinese Banknote Designs’, China Review vol. 18, no. 2, Special themed section: Frontiers and Ethnic Groups in China (May 2018): 87-120.
^Helen Wang, ‘Mao on Money’, East Asia Journal vol.1, no.2 (2004): 86-97.
^"中国最早的一张人民币". Cjiyou.net. 22 October 2007. Archived fromthe original on 7 December 2008. Retrieved6 April 2012.
^Melissa Lawford. Reporter forThe Telegraph. (24 December 2023). "How Xi Jinping is challenging dollar dominance with landmark Saudi deal".Yahoo Finance website Retrieved 25 December 2023.
^Hui, Daniel; Bunning, Dominic (1 December 2010)."The offshore renminbi"(PDF). HSBC. Archived fromthe original(PDF) on 22 October 2012. Retrieved14 July 2012.
Ansgar Belke, Christian Dreger und Georg Erber:Reduction of Global Trade Imbalances: Does China Have to Revalue Its Currency? In:Weekly Report. 6/2010, Nr. 30, 2010,ISSN1860-3343, S. 222–229 (PDF-File; DIW OnlineArchived 17 July 2011 at theWayback Machine).
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