Yuan vs Renminbi
Difference between Yuan and Renminbi is something similar to the difference between USD and dollar. Did not understand? In the course of this article, this will be explained to you. For decades, people all over the world have been trading in Yuan, the official Chinese currency and, if we are not wrong, Yuan is the name that was given in our text books when we learnt various currencies of the world. Of late, however, China has been spreading a new word called Renminbi as its official currency, which has confused many people around the world. However, the relation between Yuan and Renminbi is simple and natural, and this article will explain the difference between the two.
Let us first talk about USD, which is the official currency of USA, and dollar is its base unit. The distinction between the two is as clear as day and night to all the investors around the world, and they know that they are virtually talking about the same entity whether they use USD or dollar in their conversation. The same thing applies to Yuan and Renminbi. Thus, if you see RMB 100, it simply means 100 Yuan and nothing else. Let’s discuss this in depth.
What is Renminbi?
Renminbi is the official name of the Chinese currency. RMB is an acronym that stands for Ren Min Bi, or People’s Money in simple English. This is similar to USD, which stands for United States Dollar. Just remember that RMB has more official connotation than Yuan, which is the currency unit of the currency system. It is similar to pound sterling in Britain where sterling is the official currency. You have to remember that when one is talking in abstract terms, it is better to talk in terms of official currencies such as RMB or Sterling. You must have seen the use of RMB in written English as when it appeared in newspapers when the head of IMF said that RMB is highly undervalued to which the Chinese Premier responded by saying that Renminbi is not undervalued.
What is Yuan?
Yuan is one of the units of RMB just as dollar is one of the units of USD, which is the official currency. Other units in RMB are Fen Cent and Jiao Dime, just as Yuan.
When it comes to sterling pounds in Britain, pound is the main unit of the currency. So, you cannot say someone owes you ten sterling, but it is ten pounds. Same is the case with Yuan and RMB where you do not owe someone 10 RMB and it has to be 10 Yuan.
It is easy to talk about dollar, but there are so many countries in the world having their own dollars such as Australia, Hong Kong, Canada. So, if one talks about dollar, it is not clear the exact country about which one is talking until he specifically uses the word USD or AUD. Similarly, Yuan is a unit of currency which is used both in China as well as Taiwan, but when you say Renminbi, the listener instantly knows you are talking about Chinese currency.
What is the difference between Yuan and Renminbi?
• Definition of Yuan and Renminbi:
• Renminbi is the official name of the Chinese currency.
• Yuan is the base unit of this currency.
• Purpose:
• Renminbi differentiates Chinese currency from other countries such as Taiwan that use Yuan.
• Yuan tells you how many units of Yuan an item costs.
• Formal Status:
• Renminbi has a more formal acceptance than Yuan.
So as you can see, the difference between Yuan and Renminbi is not a huge issue. It is very simple. Renminbi is the official name of the Chinese currency. Yuan is the base unit of Renminbi. Just as USD is used to refer to currency in US to differentiate it from other dollars used in various other countries like Canada, Australia, and so on, RMB tells one instantly that China is being referred to, and not Taiwan, which also uses Yuan as its unit of currency. Specially, in formal contexts you have to use RMB instead of Yuan. That is because, otherwise it might cause some confusion to the people with whom you are speaking. So, it is not wrong to say Yuan but, in a formal, international context, using RMB makes you more precise and accurate.
Images Courtesy:
- RMB 200 note issued in 1949 via Wikicommons (Public Domain)
- Yuan via Pixabay (Public Domain)
