WCURRENCY

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Overview

The Chinese Yuan, officially called the Renminbi (RMB, meaning "People's Currency"), is the official currency of the People's Republic of China. The yuan (¥) is the basic unit of the renminbi. Issued and managed by the People's Bank of China (PBoC), the CNY is the currency of the world's second-largest economy and is increasingly influential in global trade and finance.

Unlike fully floating currencies, the yuan operates under a managed floating exchange rate system: the PBoC sets a daily midpoint rate and allows the yuan to fluctuate within a band of ±2% around it. This system gives China significant control over its currency's value, a frequent source of tension in international trade discussions.

History

The Renminbi was introduced on 1 December 1948 by the People's Bank of China, shortly before the founding of the People's Republic of China in 1949. It replaced a chaotic mix of regional currencies and nationalist-era notes. During the Mao era, China operated a command economy with a fixed, artificially set exchange rate disconnected from market realities.

Economic reforms beginning in the late 1970s under Deng Xiaoping gradually opened China to the world. The yuan was devalued significantly in the 1980s and early 1990s to support export competitiveness. A landmark shift came in 1994 when China unified its dual exchange rate system and pegged the yuan firmly to the US dollar at 8.28. This peg held until 2005, when China began a managed appreciation, and again from 2008 to 2010 during the global financial crisis. In 2016, the IMF added the yuan to its Special Drawing Rights (SDR) basket, formally recognising it as a global reserve currency.

Exchange Rate & Global Role

China manages the yuan through a system known as the daily fixing: each morning, the People's Bank of China publishes a central parity rate, and the onshore yuan (CNY) can trade within ±2% of that rate. An offshore version of the yuan, traded outside mainland China, is known as CNH and can diverge more freely from the onshore rate.

The yuan's controlled nature has long been a point of international friction. Critics — particularly the United States — have at times accused China of keeping the yuan artificially weak to gain export advantages. China has gradually allowed greater flexibility, and the yuan has appreciated significantly since the mid-2000s. Despite being the currency of the world's largest trading nation, the CNY's share of global reserve holdings and international payments remains well below those of the USD or EUR, though it is growing steadily through initiatives like the Belt and Road and bilateral currency swap agreements.

Key Facts

• The currency is officially called Renminbi (RMB); yuan is the unit of account, similar to how the pound is the unit of sterling.
• CNY is the onshore yuan, traded inside China; CNH is the offshore yuan, freely traded in Hong Kong and international markets.
• In 2016 the IMF added the yuan to the SDR basket alongside the USD, EUR, GBP, and JPY — a major milestone in its internationalisation.
• The ¥ symbol is shared with the Japanese yen; context or the code CNY/JPY is used to distinguish them.
• Mao Zedong's portrait appears on all current CNY banknotes (fifth series, introduced 1999).
• China has the world's largest foreign exchange reserves, exceeding $3 trillion, managed by the State Administration of Foreign Exchange (SAFE).

See also: USD – United States Dollar · JPY – Japanese Yen · Guide