Renminbi
- This article is about the currency. For other uses, see Renminbi (disambiguation).
Renminbi 人民币 (Chinese) |
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ISO 4217 Code | CNY | ||
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User(s) | People's Republic of China | ||
Inflation | 1.5% | ||
Source | The World Factbook, 2006 est. | ||
Pegged with | A basket of currencies | ||
Subunit | |||
1/10 | jiao (角) | ||
1/100 | fen (分) | ||
Symbol | ¥ | ||
Nickname | kuài (块) | ||
jiao (角) | máo (毛) | ||
Plural | The language(s) of this currency does not have a morphological plural distinction. | ||
Coins | |||
Freq. used | 1, 5 jiao, ¥1 | ||
Rarely used | 1, 2, 5 fen | ||
Banknotes | |||
Freq. used | 1, 5 jiao, ¥1, ¥5, ¥10, ¥20, ¥50, ¥100 | ||
Rarely used | 2 jiao, ¥2 | ||
Issuing authority | People's Bank of China | ||
Website | www.pbc.gov.cn |
The rénmínbì (simplified Chinese: 人民币; traditional Chinese: 人民幣; pinyin: rénmínbì; literally "people's currency") is the currency of the mainland of the People's Republic of China (PRC).[1], whose principal unit is the yuán (simplified Chinese: 元 or 圆; traditional Chinese: 圓; pinyin: yuán; Wade-Giles: yüan), subdivided into 10 jiao (角), each of 10 fen (分). However, the fen and jiao have become increasingly unnecessary as prices have increased. Chinese retailers tend to avoid decimal values (such as ¥9.99), opting instead for integer values of yuán (such as ¥9 or ¥10).[2]
The rénmínbì is issued by the People's Bank of China, the monetary authority of the PRC.[3] The ISO 4217 abbreviation is CNY, although also commonly abbreviated as "RMB". The Latinised symbol is ¥.
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Etymology
Rénmínbì means "people" and was originally used to distinguish the issues of the Communist government from earlier issues which did not carry the title "People's Bank", only becoming the official name of the currency in 1969. Yuán is a one syllable word and in Chinese literally means round, after the round shape of ancient Chinese coins of the same name. The Korean and Japanese currency names, won and yen respectively, are cognates of the yuán 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.
First rénmínbì yuán, 1948-1955
The first rénmínbì yuán was introduced 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. It was issued only in paper money form and replaced the various currencies circulating in the areas controlled by the communists. One of the first tasks of the new government was to end the hyperinflation that had plagued China in the final years of the Kuomintang era. That achieved, a revaluation occurred in 1955, at the rate of 1 new yuán =10,000 old yuán.
Banknotes
On December 1, 1948, the newly-founded People's Bank of China introduced notes in denominations of 1, 5, 10, 20, 50, 100 and 1000 yuán. Notes for 200, 500, 5000 and 10,000 yuán followed in 1949, with 50,000 yuán notes added in 1950. A total of 62 different designs were issued. The notes were officially withdrawn on various dates between April 1, 1955 to May 10, 1955.
Second rénmínbì yuán, 1948-1955
The second rénmínbì yuán was introduced in 1955. In 1969, the name of the currency was changed to rénmínbì, with the yuán its chief unit of account. During the era of the command economy, the value of the rénmínbì yuán 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 rénmínbì 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 centres, the exchange rate was brought to realistic levels and the dual track currency system was abolished.
The rénmínbì 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 bandwidth specified by the Chinese central government.
Coins
In 1955, aluminium 1, 2 and 5 fen coins were introduced. In 1980, brass 1, 2, and 5 jiao and cupro-nickel 1 yuán coins were added, although the 1 and 2 jiao were only produced until 19981, with the last 5 jiao and 1 yuán issued in 1985. In 1981, a new coinage was introduced, consisting of an aluminium 1 jiao, brass 5 jiao and nickel-clad-steel 1 yuán. Production of the 1 and 2 fen coins ceased in 1991, with production of the 5 fen halting a year later. New designs of the 1 and 5 jiao and 1 yuán were introduced in between 1999 and 2002.
The use of coins varies from place to place. For example, coins are more often used for values less or equal to 1 yuán in Shanghai but banknotes of the lower value are more often used than coins in Beijing.
Banknotes
In 1955, notes (dated 1953), were introduced in denominations of 1, 2 and 5 fen, 1, 2 and 5 jiao, and 1, 2, 3, 5 and 10 yuán. Except for the three fen denominations and the 3 yuán, notes in these denominations continue to circulate, with 50 and 100 yuán notes added in 1980.
The denomination of each banknote is given in the 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.
Second series
The second series of rénmínbì banknotes (the first having been issued for the previous currency) was introduced on March 1, 1955. 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 rénmínbì 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.
Third series
The third series of rénmínbì banknotes was introduced on April 15, 1962. 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 July 1, 2000.
Fourth series
The fourth series was introduced between 1987 and 1997, although the banknotes were dated 1980, 1990, or 1996. They are still legal tender. Banknotes are available in denominations of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10, ¥50 and ¥100.
Fifth series
In 1999, a new series of rénmínbì banknotes and coins was progressively introduced. The fifth series consists of banknotes for ¥1, ¥5, ¥10, ¥20, ¥50 and ¥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 rénmínbì banknotes. However, the proposal is a long way from becoming law.[4]
Use outside mainland China
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,[5] [6] national laws generally do not apply. Therefore, the Hong Kong dollar and the pataca remain the legal tenders in the two territories, and rénmínbì, although accepted, is not legal tender.
The RMB is the second most popular currency in Hong Kong and is becoming the principal trading currency in the region.[7][8] Banks in Hong Kong allow people to maintain accounts in RMB. [9]
The RMB had a presence in Macau even before the 1999 return to the People's Republic of China from Portugal. Banks in Macau can issue credit cards based on the rénmínbì but not loans. Rénmínbì based credit cards can not be used in Macau's casinos. [10]
The Republic of China on Taiwan government believes wide usage of the rénmínbì would create an underground economy and undermine its sovereignty.[11] Tourists are allowed to bring in up to 20,000 rénmínbì when visiting Taiwan. These rénmínbì must be converted to the New Taiwan dollar at trial exchange sites in Matsu and Kinmen.[12] Taiwan insists that it will not allow full convertibility until the mainland signs a bilateral foreign exchange settlement agreement.[13]
In Mongolia, the RMB occupies 60% of the local cash circulation. Cambodia and Nepal welcome the rénmínbì as an official currency and Laos and Myanmar allow it in border provinces. Though unofficial, Vietnam recognizes the exchange of rénmínbì to đồng.[14]
Exchange rate
China's currency, which for the previous decade had been tightly pegged at 8.28 yuán 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 rénmínbì 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 November 12, 2007 the rénmínbì traded at 7.414 yuán per U.S. dollar which is an 11.7% increase since the removal of the peg. There are frequent suggestions that the yuán is undervalued, often on the basis of purchasing power parity analysis (see below). However, some studies suggest that the yuán 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 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.
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See also
References
- ^ Article 16, The People's Bank of China Law of the People's Republic of China (2003-12-27)..
- ^ Coldness Kwan. "Do you get one fen change at Origus?", China Daily, 2007-03-06. Retrieved on 2007-03-26.
- ^ Article 2, The People's Bank of China Law of the People's Republic of China (2003-12-27).
- ^ Quentin Sommerville (Monday, 13 March 2006). China mulls Mao banknote change. BBC News, Shanghai. Retrieved on 2007-03-18.
- ^ The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (1990-04-04). Retrieved on 2007-03-23. “Article 18: National laws shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III to this Law.”
- ^ The Basic Law of the Macao Special Administrative Region of the People's Republic of China (1993-03-31). Retrieved on 2007-03-23. “Article 18: National laws shall not be applied in the Macao Special Administrative Region except for those listed in Annex m to this Law.”
- ^ "Chinese Renminbi: Strong Currency in Asia", China.org.cn, 2003-03-30. Retrieved on 2007-01-13.
- ^ "China's renminbi goes global", chinagate.com.cn, 2003-07-07. Retrieved on 2007-01-13.
- ^ "Hong Kong banks to conduct personal renminbi business on trial basis", Hong Kong Monetary Authority, 18 November 2003. Retrieved on 2007-03-22.
- ^ "Macao gets green light for RMB services", China Daily, 2004-08-05. Retrieved on 2007-03-22.
- ^ "Regular Press Briefing of the Mainland Affairs Council", Mainland Affairs Council, January 5, 2007. Retrieved on 2007-03-21.
- ^ "CBC head urges immediate liberalization of reminbi conversion", Government Information Office, Taiwan, 12/26/2006. Retrieved on 2007-03-21.
- ^ "Taiwan prepares to allow renminbi exchange", Financial Times, January 3, 2007. Retrieved on 2007-03-13.
- ^ "RMB increases its influence in neighbouring areas", People's Daily, 2004-02-17. Retrieved on 2007-01-13.
- ^ Henry C K Liu (2007-02-15). The US as leading currency manipulator. Asia Times. Retrieved on 2007-11-09.
- Krause, Chester L. and Clifford Mishler (1991). Standard Catalog of World Coins: 1801-1991, 18th ed., Krause Publications. ISBN 0-87341-150-1.
- Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues, Colin R. Bruce II and Neil Shafer (editors), 7th ed., Krause Publications. ISBN 0-87341-207-9.
External links
- Don's World Coin Gallery - China
- Ron Wise's World Paper Money - China, Peoples Republic Mirror site
- Tables of Modern Monetary Systems by Kurt Schuler - Asia Mirror site
- The Global History of Currencies - China
- Global Financial Data data series - China Yuan Renmimbi
- Global Financial Data currency histories table ( Microsoft Excel format)
- (Chinese) (English) 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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Overview | Chinese currency |
Ancient and medieval | Knife money · Flying cash · Jiaozi · Huizi |
Near modern | Wen · Candareen (fēn) · Mace (qián) · Tael (liǎng) |
Republic of China | Yuan · Customs gold unit · OT$ (yuan) · NT$ (yuan) |
Renminbi series | 1st · 2nd · 3rd · 4th · 5th |
Special administrative regions | Hong Kong dollar · Macanese pataca |