So what is the difference between renminbi and yuan anyway?

Read any publication or watch any news program about China's currency ( CNY , quote ) and it will be referred to as either the renminbi or yuan seemingly interchangeably. So what's with the inconsistency?

Both terms are transliterations from Mandarin. Renminbi, which translates as the "people's money," is the official name given to the currency by China's communist government.

Given that the country's formal name is the People's Republic of China, renminbi gives the currency a more egalitarian air.

On the other hand, yuan, which can be translated as "dollar," is the unit of currency.

Britain's currency provides a good comparison . While sterling is the name of Britain's currency, the pound is the unit. Consequently, in the same way you would say, "The jacket costs 100 pounds," you would also say, "The pants cost 500 yuan."

When speaking Mandarin, people will typically refer to the money as yuan, among other terms, not renminbi. For example, you would say, "The bottle of juice is five yuan," not "The bottle of juice is five renminbi."

Because yuan can be translated as "dollar," in Mandarin the U.S. dollar is referred to as meiyuan , "mei" referring to America. Similarly, the Hong Kong dollar is referred to as gangyuan , with "gang" referring to Hong Kong.

When talking about China's currency in general terms rather than about a specific number of units, however, it is appropriate to refer to it as the renminbi.

For example, as head of the International Monetary Fund, Dominique Strauss-Kahn said, "The opinion of the IMF from this point of view is still that the renminbi is very much undervalued." Chinese Prime Minister Wen Jiabao has previously said, "I do not think the renminbi is undervalued."

Whether or not the renminbi is undervalued, however, is a whole new debate.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.