A while back I heard that China will introduce a 500 Yuan banknote, similar to the ones used in Hong Kong.

HK also has a 1000 note, but we're not going to see either in yuan anytime soon.

Going by experience, I often have trouble getting a vendor to break a 100 note.
I also remember that back in the UK many traders would not accept a GBP 50 note. Part of the reason was that it would decimate your float in your cash register. If you have no change left you cannot do any business.

Less boxes needed to stash all the hot cash....

Yeh, you could go buy a Bentley with just one plastic shopping bag of cash, instead of five.

Wouldnt it be closer to a trunk full rathed than 5 trunk full.
Thats if you drive an average car....A6.

Nothing quite like needing 100 yuan, and the ATM is down and trying to get some lunch money but everyone in the BOC branch is counting and recounting a couple of million yuan.

Finally got 500 yuan and walked out behind the couple carrying their millions in a paper bag.

A 500 yuan note would have to be bigger than a 100, according to how the Chinese do things.

As a 500 yuan note would imply China has a higher rate of inflation, I don't think you will see them soon.

I have heard said that the main fear is counterfeiting will be encouraged.
To be honest, if the ATM dispensed 500, I would walk back into the bank and tell them to change it for 100s. I am sure most other people would as well, creating more work and bank queues.

In the UK the largest normal bill is GBP 50 but ATMs only dispense 10s and 20s.

A 500 Yuan note may not yet be necessary and is jumping the gun a bit going from just 100 all the way to 500.

How about a 200 Yuan note? That's about 1000 Baht, which is the largest note in Thailand, where it's not that difficult to use and get change for.

The current 100 Yuan note is too low a denomination to carry around in large quantities and is after all worth just a measly US$15. So for a country that is the world's second largest economy and who wants to internationalize it's currency (as it should) larger notes will become necessary, not to mention the fact that China isn't that cheap anymore.

Even much cheaper Vietnam has a 500,000 VND dong note worth almost US$25, a full 2/3 more than the 100 Yuan note.

As further evidence that a 500 Yuan note might fail is Switzerland, whose currency of course is worth a lot more than the Yuan, but still.

Years ago you had 10, 20, 50, 100, 500 and 1000 Franc notes. Then the 500 was eliminated and replaced by a much more practical 200 Franc note, which is dispensed by ATMs and widely used. 1000 Franc notes, which are still very much in circulation, can only be obtained from banks and are generally only used for large transactions such as paying the rent, buying a car in cash etc.