Chinese yuan

The yuan, 元; code: CNY is, in the Chinese language, the base unit of a number of modern Chinese currencies. The distinction between yuan and renminbi is analogous to that between the pound and sterling; the pound (yuan) is the unit of account while sterling (renminbi) is the actual currency.

A yuán (元) is also known colloquially as a kuài (块 - "lump", originally of silver). One yuán is divided into 10 jiǎo (角) or colloquially máo (毛—"feather"). One jiǎo is divided into 10 fēn (分).

The symbol for the yuan (元) is also used to refer to the currency units of Japan and Korea, and is used to translate the currency unit dollar; for example, the US dollar is called Měiyuán (美元), or American yuan, in Chinese. When used in English in the context of the modern foreign exchange market, the Chinese yuan most commonly refers to the renminbi (CNY), which traded for US$0.1476 on July 30, 2010.

Etymology and characters

Yuan in Chinese literally means a "round object" or "round coin". During the Qing Dynasty, the yuan was a round and silver coin.

The character for yuan has two forms—a less formal, 元, and a more formal, 圓 or 圆. The pronunciation of the two is the same—yuán. The Japanese yen was originally also written 圓, which was simplified to 円 (en) with the promulgation of the Tōyō kanji in 1946. The Korean won used to be written 圓 (won) some time after World War II and as 圜 from 1902 to 1910, but is now written as 원 (won) in Hangul exclusively, in both North and South Korea. The Hong Kong dollar, Macanese pataca and New Taiwan dollar are also written as yuán (元; 圓/圆) in Chinese.

Shop prices in People's Republic of China and Republic of China (Taiwan) are usually marked with 元 after the digits. In People's Republic of China, using '￥' as well as RMB to denote the currency is common.

In many parts of China, renminbi (人民幣/人民币 rénmínbì) are counted in kuai (simplified Chinese: 块; traditional Chinese: 塊; pinyin: kuài; literally "piece") rather than "yuan".

In Cantonese, widely spoken in Guangdong, Hong Kong and Macau, kuài, jiǎo, and fēn are called mān (蚊), hòuh (毫), and sīn (仙), respectively. Sīn is a word borrowed into Cantonese from the English cent.

Early history

The yuan was introduced in 1889 at par with the Mexican peso, a silver coin deriving from the Spanish dollar which circulated widely in South East Asia since the 17th century due to Spanish presence in the region, namely Philippines and Guam. It was subdivided into 1000 cash (文, wén), 100 cents or fen (分, fēn), and 10 jiǎo (角, not given an English name, cf. dime). It replaced copper cash and various silver ingots called sycees. The sycees were denominated in tael. The yuan was valued at 0.72 tael, (or 7 mace and 2 candareens).

Banknotes were issued in yuan denominations from the 1890s by several local and private banks, along with the Imperial Bank of China and the "Hu Pu Bank" (later the "Ta-Ch'ing Government Bank"), established by the Imperial government. During the Imperial period, banknotes were issued in denominations of 1, 2 and 5 jiǎo, 1, 2, 5, 10, 50 and 100 yuan, although notes below 1 yuan were uncommon.

The earliest issues were silver coins produced at the Guangdong (Canton) mint in denominations of 5 cents, 1, 2 and 5 jiǎo and 1 yuan. Other regional mints were opened in the 1890s producing similar silver coins along with copper coins in denominations of 1, 2, 5, 10 and 20 cash.

The central government began issuing its own coins in the yuan currency system in 1903. These were brass 1 cash, copper 2, 5, 10 and 20 cash, and silver 1, 2 and 5 jiǎo and 1 yuan. After the revolution, although the designs changed, the sizes and metals used in the coinage remained mostly unchanged until the 1930s. From 1936, the central government issued nickel (later cupronickel) 5, 10 and 20 fen and ½ yuan coins. 

Aluminium 1 and 5 fen pieces were issued in 1940.

The earliest issues were silver coins produced at the Kwangtung mint. Other regional mints were opened in the 1890s. The central government began issuing its own coins in the yuan currency system in 1903. Banknotes were issued in yuan denominations from the 1890s by several local and private banks, along with banks established by the Imperial government.

In 1917, the warlord in control of Manchuria, Zhang Zuolin, introduced a new currency, known as the Fengtien yuan or dollar, for use in the Three Eastern Provinces. It was valued at 1.2 yuan in the earlier (and still circulating) "small money" banknotes and was initially set equal to the Japanese yen. It maintained its value (at times being worth a little more than the yen) until 1925, when Zhang Zuolin's military involvement in the rest of China lead to an increase in banknote production and a fall in the currency's value. The currency lost most of its value in 1928 as a consequence of the disturbance following Zhang Zuolin's assassination. The Fengtien yuan was only issued in banknote form, with 1, 5 and 10 yuan notes issued in 1917, followed by 50 and 100 yuan notes in 1924. The last notes were issued in 1928.

After the revolution, a great many local, national and foreign banks issued currency. Although the provincial coinages mostly ended in the 1920s, the provincial banks continued issuing notes until 1949, including Communist issues from 1930. Most of the banknotes issued for use throughout the country bore the words "National Currency", as did some of the provincial banks. The remaining provincial banknotes bore the words "Local Currency". These circulated at varying exchange rates to the national currency issues.

During the 1930s, several new currencies came into being in China due to the activities of the invading Japanese. The pre-existing, national currency yuan came to be associated only with the Nationalist, Kuomintang government. In 1935, the Kuomintang Government enacted currency reforms to limit currency issuance to four major government controlled banks: the Bank of China, Central Bank of China, Bank of Communications and later the Farmers Bank of China. The circulation of silver yuan coins was prohibited and private ownership of silver was banned. The banknotes issued in its place were known as 法幣 (Pinyin: fǎbì) or "Legal Tender". A new series of base metal coins began production in 1936 following the reforms.

Between 1930 and 1948, banknotes were also issued by the Central Bank of China denominated in customs gold units. These circulated as normal currency in the 1940s alongside the yuan.

The Japanese occupiers issued coins and banknotes denominated in li (釐, 1/1000 of a yuan), fen, jiao and yuan. Issuers included a variety of banks, including the Central Reserve Bank of China (for the puppet government in Nanking) and the Federal Reserve Bank of China (for the puppet government in Beijing). The Japanese decreed the exchange rates between the various banks' issues and those of the Nationalists but the banknotes circulated with varying degrees of acceptance among the Chinese population. Between 1932 and 1945, the puppet state of Manchukuo issued its own yuan.

The Japanese established two collaborationist regimes during their occupation in China. In the north, the "Provisional Government of the Republic of China" (中華民國臨時政府) based in Beijing established the Federal Reserve Bank of China (中國聯合準備銀行, pinyin: Zhōngguó liánhé zhǔnbèi yínháng). The FRB issued notes in 1938 at par with Kuomintang y

In the aftermath of the Second World War and during the civil war which followed, Nationalist China suffered from hyperinflation, leading to the introduction of a new currency in 1948, the gold yuan.

The number of banks issuing paper money increased after the revolution. Significant national issuers included the "Commercial Bank of China" (the former Imperial Bank), the "Bank of China" (the former Ta-Ch'ing Government Bank), the "Bank of Communications", the "Ningpo Commercial Bank", the "Central Bank of China" and the "Farmers Bank of China". Of these, only the Central Bank of China issued notes beyond 1943. An exceptionally large number of banknotes were issued during the Republican era (1911–1949) by provincial banks (both Nationalist and Communist).

After the revolution, in addition to the denominations already in circulation, "small money" notes proliferated, with 1, 2 and 5 cent denominations appearing. Many notes were issued denominated in English in cash (wén).

In the 1940s, larger denominations of notes appeared due to the high inflation. 500 yuan notes were introduced in 1941, followed by 1000 and 2000 yuan in 1942, 2500 and 5000 yuan in 1945 and 10,000 yuan in 1947.

Banknotes of the first yuan suffered from hyperinflation following the Second World War and were replaced in August 1948 by notes denominated in gold yuan, worth 3 million old yuan. There was no link between the gold yuan and gold metal or coins and this yuan also suffered from hyperinflation.

In 1948, the Central Bank of China issued notes (some dated 1945 and 1946) in denominations of 1, 2 and 5 jiao, 1, 5, 10, 20, 50, and 100 yuan. In 1949, higher denominations of 500, 1000, 5000, 10,000, 50,000, 100,000, 500,000, 1,000,000 and 5,000,000 yuan were issued.

In July 1949, the Nationalist Government introduced the silver yuan, which was initially worth 500 million gold yuan. It circulated for a few months on the mainland before the end of the civil war. This silver yuan remained the de jure official currency of the Republic government on Taiwan until 2000.

The Central Bank of China issued notes in denominations of 1 and 5 fen, 1, 2 and 5 jiao, 1, 5 and 10 yuan.

Banknotes

Banknotes are available in (issue date):

First (1980) edition

¥0.1 (22/9/1988),

¥0.2 (10/5/1988-2004),

¥0.5 (27/4/1987),

¥1 (10/5/1988),

¥2 (10/5/1988-2004),

¥5 (22/9/1988),

¥10 (22/9/1988),

¥50 (27/4/1987), and

¥100 (10/5/1988),

Second (1990) edition

¥1 (1/3/1995),

¥2 (10/4/1996-2004),

¥50 (20/8/1992), and

¥100 (20/8/1992),

Third (1996) edition

¥1 (1/4/1997),

All of the banknotes that are ¥1 or higher feature geographical features of China on the reverse side.

On the obverse side, banknotes less or equal to ¥10 feature different ethnicities of China. 1-jiao note has Gaoshan and Manchu men ; 2-jiao note has Buyei and Korean girls; 5-jiao note has Miao and Zhuang girls in red. 1-yuan note has Dong and Yao girls in red; 2-yuan note has Uyghur and Yi (Nuosu) girls in green; 5-yuan note has Tibetan girl and a Hui elder; 10-yuan note has Han and Mongol men.

The ¥50 note features an intellectual, a farmer, and an industrial worker, characteristic Chinese communist images.

The ¥100 note features four people important to the founding the People's Republic of China: Mao Zedong, Zhou Enlai, Liu Shaoqi, and Zhu De.

Coins carry the Emblem of the People's Republic of China, the full title of the state in Chinese and pinyin on the obverse side, and the denomination and an image of a flower on the reverse side.

Communist control

The various Soviets under the control of China's communists issued coins between 1931 and 1935, and banknotes between 1930 and 1949. Some of the banknotes were denominated in ch'uan, strings of wén coins. The People's Bank was founded in 1948 and began issuing currency that year, but some of the regional banks continued to issue their own notes in to 1949.

After the defeat of Japan in 1945, the Central Bank of China issued a separate currency in the northeast to replace those issued by the puppet banks. Termed "東北九省流通券" (pinyin:Dōngběi jiǔ shěng liútōngquàn), it was worth 20 of the yuan which circulated in the rest of the country. It was replaced in 1948 by the gold yuan at a rate of 150,000 north-eastern yuan = 1 gold yuan. In 1945, notes were introduced in denominations of 1, 5, 10, 50 and 100 yuan. 500 yuan notes were added in 1946, followed by 1000 and 2000 yuan in 1947 and 5000 and 10,000 yuan in 1948.

Various, mostly crude coins were produced by the Soviets. Some only issued silver 1 yuan coins (Hunan, Hupeh-Honan-Anhwei, Min-Che-Kan, North Shensi and P'ing Chiang) whilst the Hsiang-O-Hsi Soviet only issued copper 1 fen coins and the Wan-Hsi-Pei Soviet issued only copper 50 wén coins. The Chinese Soviet Republic issued copper 1 and 5 fen and silver 2 jiao and 1 yuan coins. The Szechuan-Shensi Soviet issued copper 200 and 500 wén and silver 1 yuan coins.

Notes were produced by many different banks. There were two phases of note production. The first, up until 1936, involved banks in a total of seven areas, most of which were organized as Soviets. These were:

Area Start year End year Denominations

Chinese Soviet Republic 1933 1936 1 fen

5 fen

1 jiao

2 jiao

5 jiao

1 yuan

2 yuan

3 yuan

Hunan-Hubei-Jiangsi 1931 1933 1 jiao

2 jiao

3 jiao

5 jiao

1 yuan

Northwest Anwei 1932 2 jiao

5 jiao

1 yuan

5 yuan

Fujian-Chekiang-Kiangsi 1932 1934 10 wén

1 jiao

2 jiao

5 jiao

1 yuan

10 yuan

Hubei 1930 1932 1 ch'uan

2 ch'uan

10 ch'uan

1 ch'uan

2 ch'uan

5 jiao

1 yuan

P'ing Chiang 1931 1 jiao

2 jiao

Sichuan-Shensi 1932 1933 1 ch'uan

2 ch'uan

3 ch'uan

5 ch'uan

10 ch'uan

Production of banknotes by communist forces ceased in 1936 but resumed in 1938 and continued through to the centralization of money production in 1948. A great many regional banks and other entities issued notes. Before 1942, denominations up to 100 yuan were issued. That year, the first notes up to 1000 yuan appeared. Notes up to 5000 yuan appeared in 1943, with 10,000 yuan notes appearing in 1947, 50,000 yuan in 1948 and 100,000 yuan in 1949.

Renminbi

As the communist forces took control of most of China, they introduced a new currency, in banknote form only, denominated in yuan. This became the sole currency of mainland China at the end of the civil war.

A new yuan was introduced in 1955 at a rate of 10,000 old yuan = 1 new yuan. It is known as the renminbi yuan.

Old Taiwan dollar

In 1946, a new currency was introduced for circulation in Taiwan, replacing the Japanese issued Taiwan yen. It was not directly related to the mainland yuan.

Main article: New Taiwan dollar

In 1949, a second yuan was introduced in Taiwan, replacing the first at a rate of 40,000 to 1. This is the currency of Taiwan today.

Connection with US dollar

Originally, a silver yuan had the same specifications as a silver dollar. During the Republican era (1911–1949), the English translation "yuan" was often printed on the reverse of the first yuan banknotes but sometimes "dollar" was used instead.

In the Republic of China, the common English name is the "New Taiwan dollar" but banknotes issued between 1949 and 1956 used "yuan" as the English translation. More modern notes lack any English text.

G20 summit

See also: Economy of the People's Republic of China#Currency system

The upcoming G20 summit will deal with currency issues regarding the Yuan.Until 2010, China had kept the Yuan in a fixed exchange rate against the US dollar, which kept the Yuan weaker than its free market rate. Ahead of the summit, in June of 2010, the central bank made a surprise weekend announcement that it would allow greater flexibility for the Yuan to appreciate against the dollar. Pundits see this buying China some time against Western critics who argue the currency's undervaluation gives China an unfair advantage in world trade.