Yuan vs. Renminbi: What's the Difference?
Christina Majaski
Is renminbi or yuan the right name for Chinese currency? Learn the differences, how it trades, the currency's history, and the key issues surrounding it today.
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Investopedia
Yuan vs. Renminbi: An Overview

Chinese money is referred to by two names: the Chinese yuan (CNY) and renminbi (RMB), which translates to "People's Currency." The distinction between CNY and RMB is subtle. RMB is the official currency of China. The yuan is the principal unit of account for that currency.

Chinese currency defines the economy of one of the world's biggest superpowers. It's also central to one of the most debated issues involving China: its perceived mercantilist policy of artificially undervaluing currency against the U.S. dollar. This is believed to give its exports an unfair price advantage.

Yuan (CNY)

The character yuan is used for round or circular things in Mandarin Chinese. This word was also used for the silver Spanish dollars introduced by European merchants in the 17th and 18th centuries.

China began to mint its own silver yuan coins in 1889. Both the Qing Dynasty and early Republican government circulated silver yuan coins and banknotes. The traditional character for yuan is also used in the currencies of other Chinese-speaking regions in the 2020s including the New Taiwan Dollar and the Hong Kong Dollar.

The modern-day Chinese Yuan uses the abbreviation CNY to distinguish between the mainland currency and other uses of the word. Forex brokers will quote prices with the ticker CNY.

The largest banknote is 100 yuan, followed by 50 yuan, 20 yuan, 10 yuan, five yuan, and one yuan. One yuan can be further divided into jiao and fen. There are 10 jiao in a yuan, like dimes in a dollar, and 10 fen in a jiao.

Renminbi (RMB)

The People’s Bank of China (PBOC) was established during the Chinese Civil War. It issued the first RMB notes in December 1948, about a year before the Chinese Communist Party defeated the Kuomintang government.

The currency allowed the new administration to unify the Chinese economy which was then divided among several regional currencies. It also distinguished the new administration from the previous government whose policies had led to high levels of hyperinflation. The RMB was revalued at a rate of 10,000 to one in 1955. Each yuan in the new series replaced 10,000 old yuan.

The value of the RMB was tightly controlled during the period of the command economy. One yuan was pegged at 2.46 yuan to the U.S. dollar until 1971. The PBOC allowed the yuan to trade on international markets as the Chinese economy began opening to the world market but the floating exchange rate was still tightly controlled.

Key Differences

One question continues to perplex many as Beijing looks at the internationalization of its currency: Does China have two currencies? Does it use CNY, RMB, or both?

RMB is the official currency of the People's Republic of China. It means "people's currency" in Mandarin. CNY is a unit of the currency. A popular analogy draws from British currency: RMB is the name of China's currency just as sterling is the currency of Great Britain. A unit of renminbi is a CNY just as the pound is the basic unit of sterling.

RMB and CNY are often used interchangeably. A storekeeper in China might also express prices in terms of kuai, which translates into "pieces" and is similar to how Americans use "bucks" to mean dollars.

CNY is the official currency abbreviation for the Chinese yuan under the ISO 4217 standard but RMB is often used as an unofficial abbreviation.

The Chinese yuan might trade for a different price in offshore markets such as Hong Kong due to China's cross-border currency controls. The unofficial abbreviation CNH is sometimes used to refer to the offshore price of the Chinese yuan to distinguish between these two prices.

Special Considerations

The Chinese yuan wasn't considered an international currency for years because of the Chinese government's rigid controls. This began to change as the Chinese government began to promote international use of the RMB.

China uses currency controls to maintain the value of the Chinese yuan at a favorable level. The PBOC sets a midpoint value against the U.S. dollar every day based on previous trading sessions and movements in international currency markets. The price of the yuan is permitted to trade within 2% of that price. The midpoint might also be adjusted based on undefined "counter-cyclical" factors at times.

Some economists believe that these controls keep the yuan artificially devalued, making the country's exports more attractive. The International Monetary Fund (IMF) reported in the summer of 2018 that the Chinese yuan was in line with fundamentals only to then witness the yuan reach a 13-month low in response to an escalating tariff war with the United States.

This drop prompted then U.S. Treasury Secretary Steven Mnuchin to comment that the Treasury was “going to very carefully review whether they have manipulated the currency.” The U.S. Treasury labeled China as a "currency manipulator." in 2019. This designation was removed the following year.

The Chinese yuan lost value during the COVID-19 pandemic largely due to reduced economic activity and strict lockdowns. The yuan suffered its largest-ever monthly price drop in April 0f 2022, losing 7% of its value over three months.

The RMB is one of the top five most-used currencies in the 2020s, in addition to the U.S. dollar, euro, yen, and British pound. The IMF increased the weight of the yuan in its Special Drawing Rights basket in 2022, an international reserve asset that the IMF created as a supplement to member countries’ official reserves.

The Bottom Line

The currency of China is referred to as either the Chinese yuan (CNY) or renminbi (RMB). The two terms are similar and they're often used interchangeably. The key difference is that the RMB is the official currency. The yuan is its principal unit of measurement.