You’re looking at a price tag in Shanghai or maybe just scanning a financial news ticker, and you see it: RMB. Then, two seconds later, the same article mentions the Yuan. It’s confusing. Most people think they are two different things, or maybe one is a digital version of the other. Honestly, it's simpler than that, but the history behind why China has two names for its money is actually pretty fascinating.
RMB stands for Renminbi. If you translate that literally from Mandarin, it means "People’s Currency."
Think of it like the relationship between "sterling" and "pounds" in the UK. You don’t go into a shop and ask for five sterlings; you ask for five pounds. In China, the Renminbi is the official name of the currency system, while the Yuan is the actual unit of account. If you’re buying a coffee in Beijing, the barista will tell you it costs 30 Yuan, not 30 Renminbi.
It’s a distinction that trips up even seasoned travelers.
Why Does the RMB Have Two Names?
To understand what is an RMB, you have to look back to 1948. This was a chaotic time. The People's Bank of China was established right as the Communist Party was consolidating power. They needed a unified currency to replace the hyper-inflated mess of the previous era. They introduced the Renminbi to signal a new start—money for the people.
The Yuan, however, is an old term. It basically means "round object" or "round coin." It's been used for centuries. So, when the new government set up the system, they kept the familiar unit (Yuan) but gave the whole system a brand-new, ideological name (Renminbi).
The Onshore vs. Offshore Split
Here is where it gets kind of weird. If you start trading currency or looking at global markets, you’ll see two different ticker symbols: CNY and CNH.
Both represent the RMB.
CNY is the onshore Renminbi. This is the currency traded within mainland China. The People’s Bank of China (PBOC) keeps a very tight leash on this. They set a daily reference rate, and the currency isn't allowed to fluctuate more than 2% from that midpoint. It’s controlled. It’s stable. It’s what the Chinese government uses to manage its domestic economy.
Then there is CNH. This is the offshore Renminbi, primarily traded in Hong Kong, but also in places like London and Singapore. Because it’s traded outside the mainland, the Chinese government has less direct control over it. It fluctuates based on global demand, market sentiment, and international trade.
Wait. Why have two?
Basically, China wants the best of both worlds. They want to maintain control over their domestic economy (CNY) while still allowing the RMB to become a global player in international trade (CNH). If you are a business owner in New York buying electronics from Shenzhen, you are likely dealing with CNH.
The Digital RMB: Not a Cryptocurrency
You might have heard about the e-CNY or the Digital RMB.
Let’s be clear: this is not Bitcoin. It’s not decentralized. It’s not anonymous. It is a Central Bank Digital Currency (CBDC).
The PBOC started testing this years ago. It’s designed to replace physical cash. In Chinese cities, almost nobody uses paper money anymore anyway—everyone uses Alipay or WeChat Pay. The government looked at that and realized they were losing visibility into how money was moving. By creating the Digital RMB, the central bank put itself back in the middle of the transaction.
It’s programmable money. Theoretically, the government could put an "expiration date" on digital cash to force people to spend it and jumpstart the economy. Or they could track every single transaction in real-time. It’s a massive technological leap, but it’s also a tool for state oversight.
Does the RMB Compete With the Dollar?
For decades, the US Dollar has been the undisputed king. Most oil is priced in dollars. Most central banks hold their reserves in dollars.
China wants to change that.
They’ve been pushing for "de-dollarization." You’ll see headlines about China signing deals with Brazil or Saudi Arabia to trade in RMB instead of USD. In 2016, the International Monetary Fund (IMF) even added the RMB to its Special Drawing Rights (SDR) basket. That was a huge deal. It meant the RMB was officially recognized as one of the world's five elite reserve currencies, alongside the Dollar, Euro, Yen, and Pound.
But don’t expect the Dollar to disappear tomorrow.
The RMB still has a major hurdle: capital controls. Because the Chinese government limits how much money can move in and out of the country, global investors are often hesitant to hold massive amounts of RMB. You can't have a truly global reserve currency if people aren't free to move that money whenever they want.
Symbols and Subdivisions
If you're looking at a bank statement, the symbol for RMB is the same as the Japanese Yen: ¥.
In China, they often use the character 元.
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The breakdown of the currency is also a bit different than the Western decimal system.
- The Yuan is the primary unit.
- The Jiao is one-tenth of a Yuan (like a dime).
- The Fen is one-hundredth of a Yuan (like a penny).
Hardly anyone uses Fens anymore. Even Jiaos are becoming rare in big cities as everything goes digital. If you see a price like 6.58, that's 6 Yuan, 5 Jiao, and 8 Fen.
Practical Steps for Managing RMB
If you are planning a trip to China or starting a business relationship there, the "old way" of doing things doesn't work.
- Skip the Cash: You can’t survive on cash in major Chinese cities. Many vendors won't even have change for a 100-Yuan note.
- Set up Alipay or WeChat Pay: As of 2024 and 2025, these apps have made it much easier for foreigners to link international Visa or Mastercards. This is how you pay for everything from a taxi to a bottle of water.
- Watch the Midpoint: If you are exchanging large sums, don't just look at the CNH rate on Google. Check the PBOC’s daily fixing if you are dealing with mainland entities, as that dictates the "real" value inside the borders.
- Understand the "Redback": You’ll hear the RMB nicknamed the "redback" occasionally, a play on the US "greenback." This refers to the 100-Yuan note, which is bright red and features Mao Zedong.
The RMB isn't just "China's money." It's a reflection of how China views the world—a mix of deep tradition (the Yuan) and modern, state-led ambition (the Renminbi). Whether it eventually topples the dollar or remains a controlled domestic tool, it’s arguably the most important currency to watch in the coming decade.
Moving Forward with RMB
If you’re handling RMB for business, prioritize opening an offshore account in a hub like Hong Kong to maintain liquidity. For travelers, download Alipay at least a week before your trip to verify your identity and link your cards, as the "TourPass" features can sometimes be finicky with international bank security filters. Stick to digital payments for the best exchange rates and to avoid the hassle of carrying physical notes that many vendors now find inconvenient.