Eli5 Why is the value of the Chinese Yuan small compared to other countries (excluding US) even though it has the second largest economy in the world?
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The value of a base unit of currency is irrelevant. What matters is its growth (or decline), [the overall size of the economy it represents](https://www.reddit.com/r/explainlikeimfive/comments/t4r2xi/eli5_why_is_the_value_of_the_chinese_yuan_small/hz0dwb0), and the purchasing power of its people.
The base unit of Japanese currency is the Yen.
It takes about 100 Yen to equal 1 US dollar. Does that mean the Japanese currency is 100x weaker than the US currency? No.
What would matter is if that exchange rate for 1 dollar changed from 100 Yen to 200 Yen, or from 100 Yen to 50 Yen.
Look at how the exchange rate of Yuan to dollar has changed over time to see the changing (mostly increasing) strength of the Chinese economy reflected over time.
Similarly, imagine if the base unit of American currency changed to the penny. Then 1 Yen would be equal to 1 penny instead of 100 Yen being equal to 1 dollar. Does that change anything? No, because 1 Yen already equals about 1 penny.
Similarly, if 6 Yuan is about equal to 1 dollar, China could change their currency to the decaYuan (i.e. 10 Yuan becomes the decaYuan) overnight and then suddenly 1 decaYuan would be equal to almost 2 dollars! Would that change anything? No, because 10 Yuan is already eqaul to almost 2 dollars.
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