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Banks & Taxes in China
The Chinese Currency
"If you have money, you can make the devil push your grindstone," as an ancient Chinese proverb says, or in less flowery terms: money works wonders. So, when you move to China, don’t neglect financial matters! Our Relocation Guide introduces you to the Chinese currency and various payment methods.
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Today’s Chinese currency was introduced in 1948 during the Chinese Civil War and became firmly established after the People’s Republic was founded in 1949. It is aptly called rénmínbì (RMB), which roughly translates as “people’s money”.
However, the Chinese currency is more commonly referred to as yuán (CNY). The basic unit is one yuan. It equals 10 jiăo or 100 fēn. If you understand some spoken Mandarin, you might also pick up on nicknames like kuài (for yuán) and máo (for jiăo).
The Currency in China and Its Special Administrative Regions
In the provinces of Inner Mongolia and Tibet, two out of five autonomous regions for important ethnic groups, the Chinese currency is renamed in the respective local language. In Mongolian, renminbimeans aradin jogos, and 1 yuan is 1 tugreg (or 100 mönggü). In Tibet, the official name of the Chinese currency is mimangxogngü, and its basic unit is 1 gor (10 gorsur / 100 gar).
Please note that the yuan is only legal tender in mainland China. Hong Kong and Macao have their own currencies: the Hong Kong dollar (HKD) and the Macao pataca (MOP). You can’t pay with yuan in either location, though it’s very easy to exchange renminbi for local money.
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Chinese Coins and Banknotes
The Chinese currency comes in a series of banknotes and coins. The banknotes presently in use include smaller notes of 0.1, 0.2, and 0.5 CNY, as well as 1, 5, 10, 20, 50, and 100 CNY. There used to be a two yuan note as well, but it was discontinued in 2005.
The new banknotes all feature the portrait of Mao Zedong on the front. They are issued by the state-owned CBPMC (China Banknote Printing and Minting Corporation), as are the various coins. There is a wide range of coins in denominations from 0.01 CNY (1 fēn) up to 1 CNY (1 yuan).
Due to the increase in prices, jiăo and especially fēn have started to all but disappear from people’s wallets. It’s becoming rarer and rarer to pay with banknotes or small coins worth less than one yuan.
There are also regional differences with regard to the usage of coins vs. notes. As a rule of thumb, coins are more popular in urban areas, whereas smaller banknotes tend to be more widespread in the countryside.
Unfortunately, there’s quite a lot of counterfeit Chinese currency. While notes issued by a major bank and its ATMs are generally safe, you should be cautious in shops – particularly when you receive larger notes. Always check the watermark, and don’t be offended if the shop assistant does the same with your notes! (For further tips on preventing crime and fraud, see our safety advice for China.)
Foreign Currencies and the Foreign Exchange Trade
For expats, it’s particularly important to know which restrictions apply to the import and export of Chinese currency. You may bring up to 20,000 CNY to China and take the same amount with you upon leaving. As for foreign currencies, you are allowed to import or export up to 5,000 USD (or the equivalent in other currencies).
The Chinese currency used to be pegged to the US dollar, at a rate of 8.27:1 in 2005. In that year, however, China became more flexible with regard to the foreign exchange rate. The yuan is now fluctuating within a fairly narrow margin around a fixed base rate. The latter, in turn, depends on several international currencies, especially the US dollar, the Euro, the Japanese yen, the South Korean won, the British pound, and a few others.
Chinese enterprises may also trade directly in renminbi with business partners in selected countries, including Russia, Thailand, Vietnam, or Japan. Not that long ago, they had to go through the People’s Bank of China for all business transactions.
If a Chinese company owed a business partner abroad money, they’d pay the respective amount in Chinese currency to the People’s Bank. The bank would then convert the sum from renminbi into US dollars at the state-controlled exchange rate before transferring the money. These severe restrictions have been loosened to make international trade easier for China’s booming economy.
The foreign exchange trade for Chinese currency is still very much limited for private individuals, though. Residents of mainland China may only exchange an annual limit of 50,000 USD in renminbi per year.