The official and national currency of China, the Chinese Renmibi roughly translates into English as “the currency of the people” and so given the overzealous propaganda machine that seems to work overtime in China, one cannot help but feel as if this is no small or mere coincidence. Given the astronomically high foreign exchange rate that was operative when the Chinese Renmibi was first unleashed on the global currency market, this meant that it was simply not possible for foreign investment to occur. It seemed that the moniker of “the currency of the people” was rather apt in the circumstances.
Throughout the entire history of China, there has a wide and eclectic range of different currencies operative, and in many instances, operative at the same time. The Chinese Renmibi did not come into official existence until 1948 as a consequence of the significant amount of progress and territorial power and influence the Communist Party of China had managed to secure. It is worth noting that the currency released and produced under the instructions of the Communist Party of China was also widely referred to as the “yuan” (which was the generic term used for the currencies that had preceded it) but in 1949, the official term of usage was set as Chinese Renmibi.
Some historians and economists have contested that the introduction of the Chinese Renmibi was intended as nothing more than an indulgence in ideological vanity for the Communist Party of China as the Chinese Renmibi was predominately circulated and available within the Communist controlled provinces.
However, this is not quite true for the Chinese Renmibi was introduced to finally bring some much needed stability to the Chinese economy and hopefully bring a decisive end to the prolonged period of hyperinflation that had dogged the economy. To that effect, a full and comprehensive revaluation of the currency took place in 1955, with the view of streamlining the currency and ensuring that it was better protected against the worst effects of currency speculation, trade deficits and recessions.
1994 was an especially trying and difficult year indeed for the Chinese Renmibi and the reason for this was due to the fact that the value of the currency had plummeted to 8.62 Renmibi per 1 US Dollar. However it is crucial to note that the reason that the value of the Chinese currency had been so dramatically reduced was a decision made by the central government in order to ensure that the value of Chinese exports would actually be realised in monetary terms.
2011 was when the Renmibi reached its highest level of 6.49 per 1 US Dollar.
Somewhat ironically, the Chinese Renmibi has always experienced a very schizophrenic reception in communist China as there has been a series of projects and strategic plans implemented to try and entice and procure foreign investment opportunities. Specifically, one of the major hopes for the Chinese Renmibi is that it will in time, becomes a currency that many will come to rely upon for reserve purposes.
How purely this adheres to the strictly interpreted and enforced communist regime of China is a topic far beyond the remit and scope of this article, but suffice to say, it marks a very different chapter in the progression of the nation as a whole.
It is worth noting that since the beginning of last year, 2010, the Chinese government has introduced a wide range of different and very stringent rules and procedures indeed, designed to control and stabilise the economy all the more effectively. For example, there is currently an annual limit imposed on withdrawals, and this is set at the value of 50,000 US Dollars.
Read More about forex here