About the Chinese Yuan

Country: China
Currency:	Yuan
Alias: Chinese yuan renminbi
ISO 4217 CODES:	CNY/156
Symbol:	Y

China’s national currency is known as the renminbi – translating from Mandarin as “the people’s currency.” The basic unit of this system is the yuan, which translates as “round object.” First introduced during the Communist Party of China’s creation of the People’s Republic of China in 1949, the yuan has undergone a radical transformation over the years from being an insulated, domestic currency to one that has global impact. The yuan was once pegged exclusively to the U.S. dollar, but is now pegged to a basket of foreign currencies. Today, China is a leading exporter of manufactured goods and has the fastest-growing economy in the world.

Background of the Chinese Yuan

The People’s Republic of China is home to more than 1.3 billion people, making it the most populous nation on earth. While its economy has always been driven to large extent by agriculture, over the past several decades, China has become a major exporter of manufactured goods.

When renminbi (RMB) or “People’s Money” was first issued in 1949, the yuan was not directly valued against foreign currency due to Communist China’s insular economic and foreign policies. Once the domestic economy was opened up to foreign trade in 1978, foreigners were allow to trade with China, but only using foreign exchange certificates. As China’s industrial output continued to grow, the yuan had been pegged exclusively to the U.S. dollar, but is now pegged to a basket of foreign currencies that includes the U.S. dollar. In spite of this change, China has a huge trade imbalance by which it exports far more goods than it purchases. The imbalance was estimated to exceed $162 billion in 2004, a staggering figure that is likely to grow before it shrinks.

On a more positive note, political and trade relations between the United States and China continue to improve, though the U.S. continues to press China for human rights reforms and for China’s recognition of Taiwan as a sovereign state. U.S. corporations continue to make significant investments in China, which were valued in excess of $48 billion in 2004.

The relationship between the Chinese yuan and the U.S. dollar will be an interesting one to watch over the next decade, as the economies of these two international giants become increasingly intertwined.

The yuán which is divided into 10 jiâo, which is divided into 100 fen. Fen has so little value that it is rarely used today. Denominations for coins are 1 yuán, 5 jiâo, one jiâo, and five fen. Denominations for banknotes are 1, 2, 5, 10, 20, 50 and 100 yuán

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