FINANCE - Living Abroad in Beijing - page 302

then divided into 10 units called ji ǎ o 角) , colloquially called máo ( 毛 ); the ji ǎ o is also di-
vided into 10 units, called f ē n ( 分 ). F ē n are almost never used these days, except by banks,
but nevertheless seem to accumulate in a jar in your home because of their uselessness.
Even máo seem to be used only in convenience stores and supermarkets; everywhere else
rounds up or down to yuán. When shopping, you will most likely hear the shopkeeper say
something like “shí kuài qián” ( 十块钱 ), meaning “10 pieces of money.”
Rénmínbì banknotes come in the form of 100, 50, 20, 10, 5, and 1 yuán, as well as 5
and 1 ji ǎ o. On the rare occasion you might run into a now out-of-print 2 yuán or a 2 ji ǎ o.
As for coins, you will encounter the 1 yuán, the 5 and 1 ji ǎ o , and possibly the 5, 2, and 1
f ē n . Depending on how you shop, it can be quite possible to get about without a single coin
passing your hands.
Exchange Rates
In the past, the rénmínbì was fixed against the U.S. dollar. However, as China has moved
toward a global market economy, it has been devalued to help make China's exports more
competitive. Since 2005, the exchange rate of the rénmínbì has been allowed to float within
a narrow margin and is pegged now not against the U.S. dollar but by a basket of interna-
tional currencies. At the time of writing the general exchange rate hovered around US$1 to
RMB6.2.
It was argued in the past that the rénmínbì was highly undervalued, but measures have
been taken in recent years to appreciate it so that it is closer to its true value, and the Chinese
government has said that it intends to increase the exchange rate's flexibility and eventually
make it a reserve currency.
Prior to 2010, international trade needed to be done in U.S. dollars via the People's Bank
of China, which acted as the exchange point between foreign and domestic companies. U.S.
dollars would be sent to the central bank by foreign companies, and the bank would then
pay the respective Chinese companies according to its controlled rénmínbì rate. Conversely,
local companies trading internationally would pay the central bank rénmínbì and the bank
would issue the U.S. dollars. Since 2010, the government has begun to liberalize trading
and has allowed a growing number of countries to settle directly in rénmínbì rather than
converting to U.S. dollars. Keen to increase international use of the rénmínbì over the U.S.
dollar, the Chinese government is slowly allowing more countries hold rénmínbì. There are
many countries now, for instance, in which you can now hold deposits of money in rénmín-
bì.