The national currency implies the money issued by a state central bank or any other state monetary institution. The Chinese currency is becoming popular and a more powerful international currency day by day. The most debatable issue in the international economy is due to the policy of artificial undervaluation of Chinese money against the United States dollar, to the extent that China has been gaining an advantage in export prices until 2015. During that period, the Chinese currency received an appreciation of its growing position in the world by the International Monetary Fund.
Before 2010, since it was under strict government control, the Chinese renminbi was never considered an international currency. But now the Standard Chartered Bank forecasts that 28% of international trade from China will be made in RMB in 2020.
Differences between the yuan and the renminbi
Apart from the process of internationalization of the currency, the modern system of China has two interchangeable terms for the national currency which are: “renminbi” and “yuan” and, as such, two abbreviated currency codes are used: “RMB” and “CNY”. Will China consider the yuan or the renminbi, or will it divide the use of one or the other for participants in the international and domestic market?
As we have pointed out above, the renminbi and the yuan are interchangeable when talking about the Chinese currency, and very often they are confused. Here we are trying to specify the difference between them to clarify this misunderstanding.
The renminbi is considered the official currency of China. In the international conversion it is marked as CNY (or CNH in the territories of Hong Kong) and with the symbol ¥, but the abbreviation RMB is also commonly used.
The yuan is the unitary notion of renminbi transactions, but it also applies to the currency in general. Thus, anyone can pay for their coffee in a cafe with a 10 yuan bill and receive a change in yuan and jiao. So both currencies are classified as renminbi.
It is a similar situation with the pound sterling in Great Britain, where this term refers to the British currency, but the price is expressed only in pounds and the pound is a value of the pound sterling; the same can be seen in the US – where the price is expressed in dollars and not in Federal Reserve notes.
It is also worth mentioning that the price of all transactions of goods is always in dollars (for example, 100 dollars), pounds (for example, 100 pounds sterling) or yuan (for example, 100 yuan) – not in banknotes of the Federal Reserve, sterling or renminbi. Strictly speaking, one should say: “You owe me 100 yuan”, instead of “You owe me 100 renminbi”, because the unit is yuan.
The renminbi is Chinese money while the yuan is the unit of that currency.
About the RMB
The renminbi is considered the official currency of China and is translated into something similar to the “currency of the people”, just as the name of the country is the People’s Republic of China. It was issued by the People’s Bank of China and was introduced by the Communist government of the People’s Republic of China for the first time as an official currency in 1949.
By having the formal name of the country, the currency has gained the so-called egalitarian air. The renminbi is used properly when we refer to the Chinese currency as an abstract notion and we do not speak of an exact number of yuan: not of a specific number of units. Just as we can talk about the devaluation of gold, in the same way we talk about the devaluation of the renminbi (not the yuan).
First of all, we talk about the international role of the renminbi, since the People’s Republic of China is the second largest economy in the world and the one that contributes most to the world economy. It is no wonder then that the renminbi is expected to rise as the main international currency in the very near future.
About the Yuan
In spoken Chinese, yuan is pronounced as “kuài” and means “peace”; the word previously used for silver or copper coins. It is an accounting unit and is denominated in paper banknotes. There are bills of one, two, five, five, ten, fifty, one hundred yuan, as well as smaller denominations of fen and jiao (in coins). 10 jiao constitute a yuan and correspond to one hundred fen. The yuan in China corresponds to the use of the US dollar. in the quality of a monetary unit. We should say, “this shirt costs 150 pounds” according to the British currency and therefore to say, “this shirt costs 150 yuan”.
Today, the People’s Bank of China offers a vision of the use of the yuan and the renminbi. It can be clearly seen in their report on RMB payments for international sales of goods, services and other settlements with respect to current operations for foreign investments amounting to billions of yuan.
The Chinese currency has shown strong growth. If you have some do not bother on what to call it: if it is yuan or renminbi; all that matters is that the Chinese currency will probably have great importance in the global scenario.