RMB vs Yuan
For the people living in China, the difference between the RMB and the yuan is like a question which does not even need to be answered but for tourists or people not belonging to China who are not aware of the Chinese currency system. It is among the few most-frequently-asked questions.
“RMB” and “yuan” are one and the same thing. “RMB” is the abbreviation for “renminbi”which is also known as the “people’s money.” RMB is the official currency of the PRC (People’s Republic of China). It is issued in China by the People’s Bank of China and is officially used in mainland China. The RMB is not legal tender in Macau and Hong Kong.
The primary unit or the base unit of the currency of China is the yuan. To explain it better, we can say that the RMB is like the USD and the yuan is like the dollar. The currency system in China is:
Fen Cent
Jiao Dime
Yuan Dollar
One yuan is divided into 10 jiao and 1 jiao are again subdivided into 10 fen. Renminbi are available in banknotes in denominations from 100 yuan to 1 jiao. The coins are available in denominations from 1 yuan to 1 fen.
When China decided to move towards a free market economy from central planning, it started pegging the renminbi to the US dollar. This was done in order to increase the Chinese participation of Ren Min Bi in the foreign trade. It was decided to devalue the Ren Min Bi to make the Chinese industry increase its competitiveness. The value has been now decided to be made more flexible and its value to be gradually increased which will internationalize the RMB and make it reserve currency.
The base unit of the Chinese currency system is Yuan. It is the primary unit of Ren Min Bi. Yuan was colloquially called Kuai. As explained above each Yuan is subdivided into 10 Jiao which are colloquially called Mao and 1 Jiao is subdivided into 10 fens. Each of the units has different symbols.
There are different names for Yuan; the US dollar is referred to as Meiyuan or simply American Yuan. The Euro is referred to as Ouyuan or simply European Yuan.
Summary
RMB is the abbreviation for Ren Min Bi. RMB is the official currency of China. It is not the legal tender in Hong Kong and Macau. The base unit of the Chinese currency system is Yuan. It is the primary unit of Ren Min Bi.