China’s rapid economic rise has brought its currency, the Renminbi (RMB), into the global spotlight. Whether you're keeping up with financial news, planning a trip to Beijing, or exploring international markets, understanding what the RMB is—and how it works—has never been more important. This guide breaks down everything you need to know about China’s official currency in clear, accessible terms.
Understanding the Basics: RMB vs. Yuan
Let’s start with a common point of confusion: what exactly is the difference between RMB and yuan?
RMB, short for Renminbi, translates to “People’s Currency” in Mandarin. It is the official currency of the People’s Republic of China. Think of “Renminbi” as the formal name of the currency—similar to how “British Pound Sterling” is the official name used in the UK.
On the other hand, yuan is the unit of account. Just as we say “10 pounds” in everyday conversation instead of “10 pound sterling,” people in China say “10 yuan” when referring to an amount. So, if a meal costs 30 yuan, you're referring to 30 units of Renminbi.
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In short:
- RMB = The official name of the currency
- Yuan = The unit used to measure value
While both terms are often used interchangeably, especially in casual settings, now you know the distinction.
Currency Structure: Units and Denominations
Like most modern currencies, the RMB is divided into smaller units. One yuan is equal to 10 jiao, and one jiao equals 10 fen. However, due to inflation, fen coins are rarely seen or used today—they’ve effectively been phased out of daily transactions.
The most commonly used banknotes come in denominations of:
- 1 yuan
- 5 yuan
- 10 yuan
- 20 yuan
- 50 yuan
- 100 yuan
Coins are typically used for 1 yuan and smaller values like 1 or 5 jiao. The notes are colorful and easily recognizable, often featuring the portrait of Mao Zedong, China’s founding leader.
In practice, whether you're buying street food in Chengdu or paying for high-speed rail tickets, these denominations cover nearly all everyday expenses. However, with China being a leader in digital payments, many locals rarely use cash at all—opting instead for mobile platforms like WeChat Pay and Alipay.
Issuing Authority: The People’s Bank of China
Every currency has a central authority behind it, and for the RMB, that role belongs to the People’s Bank of China (PBOC). As the country’s central bank, the PBOC controls monetary policy, issues banknotes, manages interest rates, and works to maintain economic stability.
Unlike fully floating currencies such as the US dollar or euro, the RMB operates under a managed exchange rate system. This means the Chinese government actively influences its value to support trade and economic goals.
The PBOC sets a daily reference rate—called the central parity rate—and uses foreign exchange reserves to limit excessive fluctuations. This controlled approach helps maintain stability, especially given China’s massive role in global exports and imports.
As a result, market forces don’t solely determine the RMB’s value. Strategic interventions ensure it doesn’t appreciate or depreciate too rapidly, which could disrupt export competitiveness or capital flows.
Currency Symbols and Codes: ¥, CNY, and RMB
You may have seen the symbol ¥ and wondered whether it refers to Chinese or Japanese currency. The answer is: both! The Chinese yuan and the Japanese yen share the same symbol.
To avoid confusion, international financial systems use standardized ISO currency codes:
- CNY (Chinese Yuan) – Used in banking and foreign exchange markets
- RMB – Often used informally in media and general discussions
- CNH – Refers to offshore yuan traded outside mainland China (e.g., in Hong Kong or London)
While CNY and RMB are frequently used interchangeably, CNY is more precise when discussing exchange rates or financial transactions.
Interestingly, there can be slight differences between onshore (CNY) and offshore (CNH) yuan values due to regulatory restrictions and market access. These discrepancies allow traders and institutions to monitor capital flow trends and market sentiment toward China’s economy.
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Everyday Language: 'Kuai' and 'Mao'
When you’re walking through a local market in Shanghai or ordering tea at a roadside stall, you probably won’t hear people saying “yuan” or “jiao.” Instead, they’ll use informal terms like:
- Kuai (块) – A casual term for yuan
- Mao (毛) – Used instead of jiao
For example:
- “Shi kuai” (十块) = 10 kuai = 10 yuan
- “Wu mao” (五毛) = 5 mao = 5 jiao = 0.5 yuan
So if someone says “san kuai liang mao,” they mean 3.2 yuan. It’s similar to how English speakers say “tenner” instead of “ten pounds” or “quid” instead of “pound.”
Knowing these colloquial expressions makes travel and communication much smoother—and shows cultural awareness when interacting with locals.
Frequently Asked Questions (FAQ)
What does RMB stand for?
RMB stands for Renminbi, which means “People’s Currency” in Mandarin. It is China’s official currency.
Is RMB the same as CNY?
Yes, in practical terms. RMB is the name of the currency, while CNY (Chinese Yuan) is its international currency code. They refer to the same money but are used in different contexts.
Can foreigners use RMB outside China?
Yes—especially in regions with strong trade ties to China. Offshore trading uses CNH (offshore yuan), which is available in financial centers like Hong Kong, Singapore, and London.
Why does China control its currency value?
China manages the RMB’s value to support its export-driven economy. A stable exchange rate helps protect trade competitiveness and prevent sudden capital outflows.
Are digital payments replacing cash in China?
Absolutely. Platforms like WeChat Pay and Alipay dominate daily transactions—even small vendors accept mobile payments. Cash usage is declining rapidly in urban areas.
Can I invest in RMB-denominated assets?
Yes. Investors can access RMB bonds, offshore funds, or currency pairs through global financial platforms. However, capital controls may limit direct investment within mainland China.
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Final Thoughts
At first glance, China’s currency system might seem complex—between different names (RMB vs. yuan), codes (CNY vs. CNH), and cultural terms (kuai vs. mao). But once you understand the basics, it becomes intuitive.
Whether you’re a traveler preparing for a trip, an investor analyzing emerging markets, or simply curious about how the world’s second-largest economy functions, knowing what RMB is gives you a valuable edge.
From its controlled exchange mechanism to its growing international presence—especially through initiatives like cross-border trade settlements—the Renminbi continues to play a pivotal role in shaping global finance.
By mastering these fundamentals, you’re not just learning about a currency—you’re gaining insight into one of the most influential economies of the 21st century.