Yuan vs. Renminbi: Why Two Names for China's Currency?

 Yuan vs. Renminbi: Why Two Names for China's Currency?

By Bhupendra Thapa

"Understanding the difference between the Yuan and the Renminbi is more than learning financial terms, as it's gaining a clearer view of China's growing influence on the global economy."

The Yuan/Renminbi distinction is a genuinely small technical point (Renminbi, or RMB, is the official name of the currency itself, "the people's currency," while Yuan is the base unit of account, similar to how "Sterling" is the currency and "Pound" is the unit). But the more interesting story is what's happened to that currency's role in the world over the past few years, and the actual data tells a more nuanced story than either the "de-dollarization" narrative or dismissals of it.

Two Names, One Currency

Renminbi (RMB), meaning “the people’s currency,” is the official name of China’s currency. The yuan is its basic unit of account. The distinction is similar to the relationship between sterling and the pound in the United Kingdom: the currency has an official name, while the unit is used to express prices and amounts.

In everyday conversation, people often use “yuan” and “renminbi” interchangeably. In international financial markets, the standard currency code for the onshore renminbi is CNY. The offshore market commonly uses the designation CNH. These labels refer to related markets for the same currency, but the onshore and offshore markets do not operate under identical conditions.

The distinction matters because the renminbi’s international role is not determined simply by how many goods China produces or exports. It also depends on whether foreign businesses can use the currency conveniently, whether investors can buy and sell renminbi-denominated assets, and whether central banks can hold and convert the currency with confidence.

Where the Renminbi Stands

The renminbi has established a presence in international payments, but its share remains much smaller than those of the US dollar and the euro.

According to SWIFT’s September 2026 Global Currency Tracker, which reports August transaction data, the renminbi accounted for 3.26% of the value of global payments recorded on SWIFT. It ranked fifth among the currencies shown in the tracker. The US dollar accounted for 52.09%, while the euro represented 21.37%.

These figures require an important qualification. SWIFT measures transactions reported through its financial messaging network; it does not capture every international payment or every settlement channel. The percentages therefore describe currency use within SWIFT’s reporting framework rather than the complete global payments market.

The renminbi’s share has also fluctuated. It reached approximately 4.74% in 2024, fell below 3% during parts of 2025 and subsequently recovered. That movement suggests that international use is expanding unevenly rather than following a steady upward path.

The concentration of offshore activity is another important feature. SWIFT’s data show that Hong Kong accounts for roughly three-quarters of offshore renminbi payment traffic by value in recent reporting periods. This reflects Hong Kong’s established role as a financial centre connecting mainland China with international markets. It also shows that the currency’s offshore infrastructure remains concentrated in a relatively small number of locations.

The picture is different when central banks’ foreign exchange reserves are considered. The International Monetary Fund’s Currency Composition of Official Foreign Exchange Reserves data for the second quarter of 2026 put the renminbi’s share at 2.11%. The dollar accounted for 56.70% and the euro for 20.60%.

The contrast is significant. China accounted for about 32% of global manufacturing production in 2024, according to the United Nations Industrial Development Organization. Yet the renminbi represented only a small share of disclosed global foreign exchange reserves in the second quarter of 2026.

Economic production and reserve-currency status measure different things. A country can manufacture and export a large share of the world’s goods without its currency becoming the preferred store of value for central banks. Reserve managers also consider market liquidity, convertibility, access to safe assets, financial stability and the ability to move funds when needed.

Where the Renminbi Is Gaining Ground

The renminbi’s international position looks stronger in certain specialist financial activities than in broad payments or official reserves. Two useful examples are trade finance and foreign exchange trading.

Trade finance. SWIFT’s September 2026 tracker, based on August data, recorded the renminbi at 9.14% of the value of trade-finance transactions reported through its network. The dollar accounted for 80.68%, while the euro represented 4.79%.

Trade finance includes financial instruments and payment arrangements used to support international trade. The renminbi’s position in this category is therefore meaningful: it is being used to finance and settle transactions connected with cross-border commerce, particularly where Chinese businesses and their trading partners are involved.

However, the figure should not be interpreted as the renminbi financing 9.14% of all world trade. SWIFT’s trade-finance statistics cover specific transaction types recorded through its network. They are not the same as the share of global merchandise trade invoiced or settled in renminbi.

Foreign exchange trading. The Bank for International Settlements’ 2025 Triennial Central Bank Survey found that the renminbi’s share of global foreign exchange turnover rose from 7.0% in April 2022 to 8.5% in April 2025. It remained the fifth most traded currency.

The dollar was on one side of 89.2% of all foreign exchange transactions in April 2025, compared with 28.9% for the euro. These shares add up to 200%, rather than 100%, because each foreign exchange transaction involves two currencies.

The renminbi’s increase demonstrates that it is becoming more relevant to currency trading, but foreign exchange turnover is not the same as international payment use or reserve holdings. Trading can rise because of hedging, currency volatility, market-making and financial activity even when a currency’s role in long-term reserves changes little.

Taken together, the figures point to selective internationalization. The renminbi is used in international finance, and its position has strengthened in some areas. But progress in trade finance and currency trading has not translated into a comparable share of global payments or central bank reserves.

Why Progress Is Gradual

One major constraint is China’s management of cross-border capital flows. The Chinese authorities have expanded the channels through which foreign investors and businesses can use the renminbi, while retaining significant controls on movements of financial capital.

The International Monetary Fund’s 2026 analysis of China explains the distinction between the onshore CNY market and the offshore CNH market. The offshore market allows broader international participation, while access to the onshore market and movements between the two are subject to regulatory arrangements.

These controls serve policy objectives, including financial stability and monetary-policy autonomy. They also complicate the process of making the renminbi a currency that international investors can use without significant restrictions. A central bank considering reserve holdings needs to know not only that an asset can be purchased, but also that it can be sold or converted when required.

The depth of financial markets matters as well. Reserve managers generally prefer markets where large transactions can be executed without causing substantial price movements. The US Treasury market, supported by its scale and liquidity, provides an important advantage to the dollar. China has a large bond market, but the degree of access, market structure and capital controls influence how attractive renminbi-denominated assets are to global reserve managers.

Confidence is another factor. Investors and central banks consider the transparency and predictability of rules, the protection of financial claims, and the ability to move funds during periods of uncertainty. Economic size can create demand for a currency, but it does not automatically establish the institutional conditions that support widespread reserve use.

None of these barriers makes greater renminbi use impossible. China has developed cross-border payment infrastructure, clearing arrangements and channels for international investors. The IMF has also documented the gradual easing of some restrictions. But the pace of internationalization depends on policy choices as well as commercial demand.

A Side-by-Side Comparison

The following table combines the latest available SWIFT figures with the most recent IMF reserve data and the BIS’s 2025 foreign exchange survey. Because each institution publishes on a different schedule, the dates are not identical.

Measure	Renminbi	US dollar	Euro
Global payments recorded on SWIFT, August 2026	3.26%	52.09%	21.37%
Trade finance recorded on SWIFT, August 2026	9.14%	80.68%	4.79%
Global FX turnover, April 2025	8.5%	89.2%	28.9%
Official foreign exchange reserves, Q2 2026	2.11%	56.70%	20.60%

Notes: SWIFT figures are based on transaction value recorded through its network, not all global transactions. FX turnover shares add to 200% because every transaction involves two currencies. Reserve shares refer to the currency composition of allocated global foreign exchange reserves reported to the IMF.

The comparison shows why the renminbi’s international role needs to be assessed across several measures. Its share of trade finance is much larger than its share of official reserves, while its position in foreign exchange trading is stronger than its position in global payments. Each measure captures a different function of an international currency.

This distinction also helps explain why claims of rapid de-dollarization can be misleading. A rise in renminbi-denominated trade or foreign exchange turnover does not necessarily mean that central banks are replacing dollar reserves at the same rate. Equally, the dollar’s continued dominance in reserves does not mean that other currencies cannot gain importance in particular markets.

Conclusion

The evidence supports a measured conclusion. The renminbi has become an established participant in international finance, particularly in trade-related transactions and foreign exchange trading. China’s manufacturing strength and role in global commerce provide a substantial foundation for further use of its currency. Yet the dollar remains far ahead in global payments, foreign exchange trading and official reserves.

The differences between these measures are more informative than any single ranking. Trade finance reflects the currency’s role in supporting cross-border commerce. Foreign exchange turnover measures its presence in currency markets. Reserve shares reveal how central banks allocate their foreign currency assets. A currency can gain ground in one category without making equivalent progress in the others.

China faces a policy choice at the centre of this process. Wider international use could reduce some exchange-rate risks for Chinese firms and give overseas trading partners more ways to settle transactions. But a more globally influential currency also requires foreign users to have confidence in access to markets, the convertibility of funds and the predictability of financial rules. Greater openness can bring benefits, but it also creates challenges for managing capital flows and domestic financial stability.

The most reliable way to assess the renminbi’s progress is to look for sustained gains across several years and across different measures, rather than treating one month’s increase as evidence of a major shift in the global monetary system. The currency’s international role is growing, but it remains selective. Whether that changes substantially will depend not only on China’s economic scale, but also on the financial and policy conditions that make a currency trusted and practical to use worldwide.

Sources

Bank for International Settlements. (2025, September 30). Global FX trading hits $9.6 trillion per day in April 2025 and OTC interest rate derivatives surge to $7.9 trillion: Triennial Survey. https://www.bis.org/media-releases/20250930-global-fx-trading-hits-96-trillion-day-april-2025-and-otc-interest-rate-derivatives-surge-79

International Monetary Fund. (2026). People’s Republic of China: 2025 Article IV consultation. https://www.elibrary.imf.org/view/journals/002/2026/044/article-A001-en.xml

International Monetary Fund. (2026, September 30). World official foreign currency reserves increased slightly in the second quarter of 2026: Currency composition of official foreign exchange reserves. https://data.imf.org/en/news/imf%20data%20brief%20september%2030

International Monetary Fund. (2026). Application of the integrated policy framework to China. https://www.elibrary.imf.org/view/journals/002/2026/214/article-A002-en.xml

SWIFT. (2026, September 17). Global Currency Tracker: September 2026. https://www.swift.com/products/global-currency-tracker/document-centre

United Nations Industrial Development Organization. (2025). International yearbook of industrial statistics 2025. https://www.unido.org/sites/default/files/unido-publications/2025-11/UNIDO%20Industrial%20StatisticsYearbook%202025.pdf