Doing Business in China For Dummies®

Introducing China’s Currency: The Tricky RMB

China’s currency has two names: the renminbi (RMB) (run-mean-bee) and the yuan (yu-en). Renminbi literally means the people’s currency. As this section explains, the RMB is quite unlike most other currencies you’re familiar with. It’s considered a soft currency, which means that it isn’t traded on world exchanges. China places a lot of controls on trading the RMB, and they affect almost every aspect of your business. (For information on cash, including its denominations and appearance, see Chapter 5.)

The Hong Kong dollar Hong Kong’s currency is the Hong Kong dollar (HKD). Even though China has assumed sovereignty over Hong Kong, Hong Kong maintains separate control over its currency. In contrast to the RMB, the HKD is a hard currency, which means that it can be exchanged anywhere in the world. The Hong Kong Monetary Authority (HKMA) manages the currency. For many years, the HKMA has kept the HKD pegged to the U.S. dollar. In other words, the HKMA ensures that the HKD maintains a steady value against the USD, which is about 7.7 to 7.8 HKD to 1 USD.

What you need to know about the RMB

One of the crucial aspects to doing business in China is understanding China’s system for converting money. The RMB is only a semi-convertible currency — that is, you can convert the RMB to U.S. dollars, euros, or other foreign currencies only under certain circumstances.

In the system you’re probably used to, a person in the U.S. who wants to get euros ...