Take the bill the long way up and kind of ruffle it in your hands. The sound should be clear and distinct. If fake, the sound is muffled and the paper seems crisp.
There are two things to see in the light. If you hold the bill up you will see on the left side in the white space, there is a clear picture of Chairman Mao's face. On the fake bills, the outline of his face is blurred. Below the 100-number in the center of the note, there is a red and blue symbol inside a red circle with the red and blue sections on either side of the note. In the real bills, the red and blue boundaries in the symbol are very distinct. They are perfectly aligned, or else they overlap just very very slightly. In the fake bills the symbol is distorted. The red and blue sections are not aligned, one is usually a little higher than the other and often there is either a white space between their boundaries or they overlap unevenly. This is the easiest identifying mark of these bills.
Below the white space, there is a green 100 (or 50 on the 50 bill, 20 on the 20 bill etc.) sign in the left corner. When looking flat at this sign, it is green. When the bill is tilted upwards, and you are looking at the sign from the bottom up the 100 turns brown. This is a real bill. But if when you tilt the bill upwards the symbol is only dark green, then this is a fake bill. This difference is slight and is easily seen if you have a real bill next to the fake bill.
The texture of the picture of Chairman Mao
Hold the bill in your hand and rub your thumb gently against the collar on the big picture of Chairman Mao. You will notice a difference in texture on his collar. You will only feel it if you rub gently. If the paper is completely smooth, without any texture, you are holding a counterfeit! (Editor's note: another thing you can do here is rub Mao's face on a piece of white paper and if real, it will leave behind a slight red mark)
The difference of "100"
On the top right hand corner, there is a 100 sign. Just overlapping a little below the 100, there is an oval design. If you turn this design up, so you are looking up from the bottom, then place it so that light shines on it, you will see a very faint "100" on the oval. It is just slightly raised, this is a real bill. In the fakes, the 100 is either not there, or is very difficult to see.