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Chinese Yuan Executive Summary (CNY)

Country Overview

Foreign Exchange

The Chinese Yuan is controlled by the Central Bank of China, ( Its operational objectives include: promoting financial stability, ensuring sound banking operations, maintaining the stable internal and external value of the currency and fostering economic development. It's core functions and operations consist of monetary management currency issuance and foreign exchange management among others.

The CNY is allowed to fluctuate ±2% (instead of ±1%) around the People's Bank of China's central parity for USD – CNY benchmarks. It should be noted that CNY's trading band has widened, allowing market forces to play a larger role in the currency's valuation.

Sovereign Debt

In the light of ebbing inflationary pressures, the central bank has cut interest rates (the most recent reduction, by 25 basis points, having been announced on February 28th), which should support economic growth of 7.2% in 2015. Another cut is expected later in the year. That said, China enjoys a relatively stable credit rating outlook. It's long-term foreign currency ratings are: Standard & Poor's: "AA-"; Fitch Ratings: "A+" and Moody's: "Aa3".

Growth Outlook

The minimal data available for the Chinese New Year period suggest that the economy lost some momentum at the outset of the year. The PMI dipped into negative territory for the first time in over two years in January, while both exports and imports deteriorated in the same month. The National People's Congress is going to meet on 5 March at which time it is expected that Chinese authorities will unveil this year's economic targets. According to analysts, the growth target could be lowered from the 7.5% set for last year to 7.0% for 2015.


Annual inflation rose from January's 0.8% to 1.4% in February, which overshot the 1.0% that market analysts had expected. January's print had represented the lowest rate since November 2009. As a result of acceleration in inflation, the trend halted the downward trend in place since September 2014. Annual average inflation remained at the previous month's 1.8% in February.

While the rebound in inflation partially reflected a distortion from the Chinese New Year, which fell in February this year but was in January in 2014, analysts warn that disinflationary pressures are still intact and that it paves the way for further monetary policy easing in the months to come. Forecasters expect that inflation will average 1.9% in 2015.


China has been a socialist country since 1949, and, for nearly all of that time, the government has played a predominant role in the economy. President Xi Jinping and Premier Li Keqiang have focused on the implementation of structural reforms, which include liberalizing interest rates and exchange rate – both significant economic reforms given China's political landscape. Additionally, there have been adjustments to the management of local government finances and state-owned enterprises. we would be stepping down as Prime Minister of Iraq to allow his opponent Haider al-Abadi to take his place.

Financial Sector

China's total GDP of 9.24 trillion USD as of 2013 symbolizes its status as a major player in the world's economic landscape. The economy is expected to gradually slow in the coming years in line with the government's strategy to promote more balanced economic growth. Low oil prices and a stronger-than-expected global recovery promise to spur growth. That said, the main downside risks continue to be a sharp correction in the real estate market and the rising level of local government debt. For this year, forecasters maintain their growth projections stable at the previous month's 7.0%. Next year, the panel sees growth slowing slightly to 6.8%.

Chinese Yuan (CNY)
Phonetic Spelling
/juːˈɑːn/ or /ˈjuːən/


In Mandarin, yuán literally translates to "round object" or "round coin", as during the Qing Dynasty, the yuan was a in fact a round coin made of silver. Informally, the word is symbolized by the Chinese character 元, which means "beginning". In more formal and banking contexts, the simplified character 圆 is interchangeably used along with the more traditional version 圎 - both meaning "round".

Inside China, ‘¥' or ‘RMB' is often prefixed to the amount to indicate that the currency is the renminbi - which is the colloquial, official currency of the Peoples Republic of China, with the Yuan acting as the basic units of the renminbi. (e.g. ¥100元 or RMB 100元).

Currency History

China has a rich history, in every sense. China was one of the first nations to create currency to take the place of barter. Cowry shells were believed to be the earliest form of currency used in Central China, about 3000 to 4500 years ago. The Chinese Yuan is the most recent of its currencies. During the Imperial period, as part of the Unification of China, Qin Shi Huang (260 BC – 210 BC) abolished all other forms of local currency and introduced a uniform copper coin based on the coins previously used by Qin. The first instances of this currency took the shape of coins with circular holes in the middle, made from bronze and cast into molds. Nearly a century later the first emperor of China, Shi Huangdi, changed that to a square hole, and that design remained for another 2,000 years.

Before the Yuan, China momentarily experimented with paper notes around 910 AD during the Five Dynasties period. The currency caught the attention of the famous explorer Marco Polo, noting that the emperor could print enough money to buy all the goods in the world at no cost to himself. In 1889, the Yuan was introduced as a silver coin derived from the Spanish dollar (peso). The peso had been widely circulated in South East Asia since the 1600's due to Spanish presence in Guam and the Philippines. The Yuan replaced copper cash and silver ingots called sycees. Around that same time the Yuan was also issued in banknotes.

Later, in 1903, the government started issuing other coins in the Yuan currency system. These were brass and copper coins in the denominations of 2, 5, 10 and 20 and silver coins in 1, 2, and 5. The sizes of the coins and metals used did not change after the revolution and stayed the same until the 1930's when nickel and aluminum coins were introduced. The Communist Party of China gained control of large areas of China during 1948 and 1949. Although several regional banks were established, they were united in December 1948 as the People's Bank of China, and the new bank took over currency issuance.

Today, the Chinese Yuan is also colloquially referred to as the Renminbi (RMB) which translates to "the peoples' currency". It was first issued by the Chinese Communist Party's People's Bank of China in 1948, with a second series of Yuan issued in 1955, replacing the old Yuan at a rate of 10,000 old Yuan to one new Yuan, the currency used today.

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