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The currency of China is the renminbi (RMB) or yuan (or colloquially known as 'kwai') and you may see Hong Kong dollars in southern China. ATMs are common in urban and tourist areas of China. "Union Pay" credit cards issued in China are widely accepted at regular stores and larger restaurants. American Express, Visa and MasterCard issued elsewhere without the Union Pay symbol are not widely accepted at stores and restaurants. Hotels, expensive tourist restaurants and expensive shops generally take foreign-issued cards. Elsewhere, the Chinese yuan is king.
Some tours advise that merchants will accept foreign currency. This applies only to expensive "shopping stops" and specific market vendors. In general, a Chinese merchant or restaurateur will shake their head no at any foreign currency. Carry Chinese yuan at all times to pay for your everyday purchases and meals at most restaurants. (Think to yourself, what would a merchant in your own country do when presented with a 100 Chinese yuan note?)
Traveler's checks are an option in China, but not as convenient as periodic withdrawals from ATMs. The traveler's checks can be exchanged at certain airports, certain large branch banks, some large department stores, and many hotels at a rate slightly better than cash. Exchange rates are regulated, but fees and commissions are not. So look at all the details when exchanging money, especially at currency exchanges at the airports. When you exchange money you must present your passport for identification. Exchanging anywhere other than at an ATM means you are carrying your passport. Most savvy tourists, when arriving at Shanghai or Beijing, use the several ATMs right in the airport so they have cash for a taxi and other incidentals.
Chinese banks sometimes are very busy, so you might find yourself waiting valuable touring time (15 minutes or longer) to exchange currency or cash a traveler's check. Sometimes you have to wait for a teller who understands English. Many upscale hotels now have ATMs right in the lobby, and in China there is no service fee for using an ATM. Your home bank, of course, may charge you according to its terms, including a foreign transaction fee and per-withdrawal fee. Inquire before you leave home.
When handling currency in China your money will be closely inspected, run through a counterfeit detector and possibly rejected. Beware of a scam reported periodically when a taxi driver takes your Chinese yuan, only to return it to you as too dirty or worn, asking you to give the driver another better bill. Many times, the driver is doing a switch, substituting a counterfeit bill for the currency you gave the driver, thus leaving you with a fake bill which will be rejected the next time you pay cash.
Retain your exchange receipts, even from ATMs. These are needed to convert Renminbi back into foreign currency when leaving China. For safety's sake, it is wise to convert only a few days of cash needs at a time. Thus you should not have too much Chinese currency to exchange back into your home currency. The largest Chinese yuan bill is 100, so if you exchange a large amount, you might end up carrying a large wad of money, not advisable for tourists. Try to have some small bills, as you will need them to pay cab drivers, etc.
Some advise travelers before they leave home to open up a separate checking account at your local bank and deposit into that account about the amount of money you plan on bringing or using in China. Get an ATM card from your bank for this account, making sure the ATM card has a MC/Visa logo. You can tap into this account while in China, using any ATM machine. Your other accounts at home will remain safe.
All the ATM machines have instructions in English, just look for the right buttons to press. Chinese ATMs dispense cash before returning your card, different than the process in some countries where you must take your card before the cash is dispensed. So do not forget your ATM card in the machine after putting your pile of new 100 yuan bills in your wallet. Remember to carry your wallet in a front pocket or similar close personal location, and not in a rear pocket or in an outside pocket of a purse. Crime is very low in China, but in the big cities pickpockets have been known to operate in crowded areas, such as in queues at a subway.
Recent reports are that ATMs will only accept four digit passcodes and that it is advisable to change your PIN if you have a different format.