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Renminbi
and Foreign Exchange Control
China’s official currency, the
Renminbi (RMB), is issued and managed by the People’s Bank of China.
The currency is denominated in yuan (one yuan equals 10 jiao, and
one jiao equals 10 fen). The exchange rate of RMB is formulated
by the People’s Bank of China, and issued by the General Administration
of Exchange Control. China exercises centralized management over
foreign exchange, this function being performed by the General Administration
of Exchange Control.
In 1994, reforms were
carried out in the administration of foreign currencies, adopting
a combination of exchange rates (from the simultaneous existence of
several exchange rates to a single market exchange rate) and a unified
settlement and sale of foreign exchange, and a unified inter-bank
foreign exchange market was established. This had an important influence
upon China’s economic development and reform and opening to the outside
world. Since 1996, foreign currency business of foreign-invested enterprises
has been directed into the banking system of settlement and sale.
On December 1, 1996, China formally accepted Article 8 of the Agreement
on International Currencies and Funds, realizing the convertibility
of the RMB under the current account ahead of schedule. This was a
major breakthrough in reforming the country’s foreign exchange control
system. Facing the impact of the Asian financial crisis since 1997,
the Chinese government has declared that it will maintain the exchange
rate of the RMB, stating that the RMB will not be devaluated, winning
the appreciation of the international community. In 1999, China’s
foreign exchange reserves totaled US$ 154.7 billion, 99 times that
of 1978. |
