Chinese money. Chinese money: names. Chinese money: photo

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The yuan, following the Chinese economy, is increasingly significantly increasing its importance in the world. Let's see what factors determine the global outlook for the Chinese currency.

Correct currency name

Yuan - this is how Chinese money is called in the world. This name, however, does not quite correspond to the sound of the national currency in China itself. At home, Chinese banknotes are called nothing more than "renminbi" (in translation - "money of the people"). And the yuan is just a noun, meaning money in principle. But the brevity and euphony of this Chinese word turned out to be to the taste of the rest, especially the Western world.

In ISO standards, the official currency designation is CNY. One yuan (“renminbi”) is equal to one hundred fen (their name inside the PRC and in the rest of the world is the same). In turn, "penny" can be combined into jiao - ten times the equivalent (like "dimes" in the US). So, PRC money is classified as follows: 1 yuan is equal to 10 jiao, which is identical to 10 fen. However, in practice, it is difficult to find a “penny” in Chinese stores, since they are withdrawn from circulation. The most common cash coins are one or five jiao. Also in the "metal" there are single yuan.

History of the yuan

The history of monetary circulation in China has several thousand years. The hieroglyphs denoting the words "goods", "purchase", "sale", "exchange" and associated with them in meaning are found in sources reflecting the times of ancient times. The first money in our usual sense appeared in the state in the 5th century BC. e. First, in the form of bronze ingots (or in the form of the simplest household items - a shovel, a knife), then Chinese coins appeared.

Money in the period corresponding to the European Middle Ages, along with copper samples, was supplemented with iron and lead format, and paper banknotes also came into circulation. Over time, Chinese money underwent a "silver" standardization, and at the beginning of the 20th century - "gold". When the communists came to power, the People's Bank of China was established. All the money that the population had in circulation was subject to seizure and exchange for the renminbi - the new Chinese money, the very "people's banknotes". The issue of the new currency has become strictly controlled by the state.

Exchange rate policy

Until 1974, the Chinese yuan was traded, as a rule, with a reference to the pound sterling, but then quotes began to be applied to the US dollar. In 1994, the country's government initiated a freeze of the yuan to the US banknote at a ratio of 8.27 renminbi to 1 "buck", which lasted 11 years. This caused discontent among some of China's trading partners, including the United States. The Chinese authorities have come under pressure to liberalize the currencypolicy, since, according to representatives of other countries, due to the low exchange rate of the yuan, China received an advantage due to purchasing power. This state of affairs was partly confirmed by the figures: the negative balance of the US trade balance with China in 2004 exceeded $160 billion, and in 2005 its increase continued. But in the same year, the Chinese government canceled the “freeze” of the exchange rate. True, as some experts note, from that moment on, the yuan was not allowed to float freely, and its rate could be artificially underestimated.

Yuan and ruble

Close economic cooperation between Russia and China is more and more impressive every year. Chinese money, their name and pronunciation features are not new for the Russian Federation. Moscow and Beijing organize joint work in many global areas, so interaction in the field of currency regulation plays an important role in trade cooperation between the two countries. Now the ruble and Chinese money are claiming hypothetical inclusion in the list of reserve currencies, but so far this has not happened in practice.

In recent years, there has been a trend - mutual settlements are not in dollars or pounds, but in national banknotes. In 2010, the ruble began to be traded on the Shanghai Stock Exchange, and the yuan, in turn, on the MICEX and RTS sites. National regulators have different principles for influencing trading. The Central Bank of China has a hard limit on fluctuations of the yuan exchange rate on the stock exchange within 0.5%. The Bank of Russia, as a rule, influences trading using foreign exchange interventions. Among traders, the yuan is of growing interest, thematic portals are appearing where you can quickly transfer Chinese money to Russian at the current rate.

Prospects for investing in yuan

Many experts believe that the yuan is undervalued against world currencies, so it makes sense to invest in Chinese banknotes with the expectation that it will rise in price in the foreseeable future. As the practice of currency trading shows, the yuan, if it grows, is not as fast as investors would like. For example, in relation to the ruble, experts say, the renminbi has recently shown an average annual growth of about 8%.

Approximately the same benefit can bring a regular bank deposit. Financiers recommend investing in yuan only in some cases. Firstly, it is advisable for regular trips to China. Secondly, the yuan can be considered as a "reserve" currency for portfolio diversification. Thirdly, deposits in yuan on the terms of Russian banks may well be of interest to the Chinese themselves, who come to Russia for the purpose of tourism or business.

Yuan and dollar

The relationship between the yuan and the main world currency obviously depends on how things will develop in friendship between the issuing countries of this money. One of the factors is that China keeps the bulk of its financial reserves in dollars. Much depends on whether the Chinese will continue to keep foreign exchange reserves within the existing structure or choose to diversify the portfolio. The head of the Central Bank of China voiced this idea at the official level - thatA country's reserves cannot consist solely of US dollars. Information has appeared in the press that China is going to sell about 2 trillion "bucks" of the available 3.04 trillion in favor of transferring it to other assets not related to the American "green". Some experts believe that the Chinese authorities are just trying to negotiate preferential terms for the yuan and turn Chinese money into a reserve currency on a par with the dollar.

The yuan as a global currency

The intentions of the Chinese government to make the yuan one of the world's leading currencies, experts believe, may have fundamental grounds. Some financial analysts expect that in the next few years, the share of China's foreign trade settlements with other countries in yuan may exceed 30%. The evolution of this figure is impressive: now it is close to 20%, while four years ago it was 3%.

In the first months of 2014, according to financiers, the renminbi ranked 7th in the list of the most popular currencies in the world, overtaking, in particular, the Swiss franc. The investment value of the yuan is growing as China becomes more open to world markets. Recently, a joint project of the banks of England and China appeared in London - a clearing center for organizing work with the yuan. Experts expect that Chinese money will become a prominent currency at the global level, but it is not at all a fact that they will replace the dollar.

Yuan outside China

Chinese currency is increasingly being used in trading stocks, bonds and other financial instruments. Givendirection will develop more intensively, the sooner the yuan can become a convertible currency. The renminbi is used in other countries with a “Chinese” profile: Hong Kong (where the share of deposits in the PRC currency reached 12%, while in 2008 it was only 1%), Taiwan, and Singapore. The last two countries have offshore RMB trading centers. Recently, the People's Bank of China and the Central Bank of Germany signed an agreement on settlements in the currency of the PRC.

The political significance of the yuan

PRC is recognized by many experts as the main engine of the world economy. Now China gives out, depending on the basis of calculation, 10-15% of the planet's GDP. The expansion of China's economic influence, and hence its influence on political processes, directly depends on the government's monetary policy. Financiers believe that the prospects for this direction depend on three factors.

• Firstly, it is internationalization - the use of currency as a tool for expressing value and making settlements in international financial transactions.
• Second is convertibility – the degree to which capital flows and outflows are restricted.
• Third is the use of foreign banks as a reserve currency.

The prospects for the yuan as an instrument of political influence depend on how the Chinese government combines priorities in these areas.