China's yuan descends from Spanish silver dollars shipped across the Pacific
From the 16th century into the 20th, China absorbed huge quantities of Spanish silver dollars minted in the Americas. Those coins became the model for every currency called yuan or dollar in mainland China, Taiwan, Hong Kong, Macau and Singapore. The first locally struck yuan accepted across the Qing empire, the silver dragon dollar, appeared in 1889.
Renminbi, meaning people's currency, is the name of the money; the yuan is its unit, much as sterling relates to the pound. A yuan splits into 10 jiao and 100 fen, though inflation has made fen coins rare. On the street hardly anyone says yuan: Mandarin speakers talk of kuai, a piece, and mao instead of jiao. Its ISO code is CNY, and abroad it is sometimes nicknamed the redback, a nod to the American greenback.
The renminbi was born in wartime. China left the silver standard in 1935 for paper fiat money, and as Communist forces took more territory in the civil war, the People's Bank of China began issuing a unified currency in December 1948, a year before the People's Republic was declared. It cycled through several names before settling on renminbi in June 1949. Taming the hyperinflation of the final Kuomintang years was an early priority, and in 1955 one new yuan replaced 10,000 old ones.
For decades its value was set by decree. Until the late 1970s the state kept the yuan heavily overvalued so priority industries could import machinery cheaply. Opening up changed that gradually over some fifteen years. From 1979 exporters could keep part of their foreign earnings, and from the mid-1980s swap centres in big cities let firms trade currency. Between 1980 and 1994 foreign visitors had to use separate foreign exchange certificates, spent in hotels and Friendship Stores; since locals could not get those goods, touts outside hotels would pay more than 1.30 renminbi for a single certificate. The certificates ended in 1994, when the rate passed 8 yuan to the dollar.
The dollar peg held until 2005, after which the currency floated within a narrow band against a basket of currencies. On 1 October 2016 it became the first emerging-market currency admitted to the IMF's special drawing rights basket, with a 10.9 percent weighting. Pilots of a digital version, the e-CNY, began in 2020 in cities including Shenzhen and Chengdu, offering an alternative to Alipay and WeChat Pay.
Source: Renminbi
