Alt+0 to show this section, Tab to navigate forward, Shift+Tab key to navigate backward, Enter to access link, and Esc to reset

Menu

17 Jun 2013

A history of China's currency

China's modern currency, the renminbi, has a 65-year history, but money as a payment mechanism in China can be traced back 3,000 years to inscriptions on ancient bronze vessels. Here are some examples of the different forms money has taken from HSBC's collection.

Cowrie shells

Cowrie shells

Money originated with the barter of physical goods. For China’s inland tribes, cowrie shells were valuable because they were rare and came from the coast and could be used for ornamentation.

Hoe coin, 400 BC

Hoe coin, 400 BC

Payment evolved from barter to bronze imitations of the actual goods. This hoe coin is from north central China, around 400BC. Using it allowed real hoes to be used for tilling the land again.

Ban Liang, 221 BC

Ban Liang, 221 BC

This was the first coin to be used across China after the country was unified by the Qin Dynasty in 221BC. It is inscribed with the characters “half a liang”, which signified its actual weight. The square hole in the middle was different from Western coins and reflected a Chinese belief in the need to balance the square earth (yin) with the roundness of heaven (yang).

Kaiyuan Tongbao, 621 AD

Kaiyuan Tongbao, 621 AD

This bronze coin dates from the Tang Dynasty (618-907) and represents the first use of the word yuan, which means “round” in Chinese. The full inscription says: “A new era has begun; coins are circulating treasures.” These treasures were spread across modern-day East Asia, providing Japan and Korea with the basis for their first currencies.

Strings of cash

Strings of cash

The hole in Chinese coins allowed them to be held together in strings of 1,000 coins. But many strings were needed for big purchases since the value of the metal determined a coin’s denomination, and bronze was worth less than the silver and gold used in the West. This was one reason why China began experimenting with paper money earlier.

Great Ming Treasure Circulating Certificate, 1380

Great Ming Treasure Circulating Certificate, 1380

This is one of the world’s oldest surviving examples of paper money. It dates from 1380 and the reign of Hongwu, the first Emperor of the Ming Dynasty. The Chinese invented paper, and by the 1040s had learnt to print on it, using movable type. In contrast the West didn’t start using paper money until the 16th century. Chinese notes were made from the bark of mulberry trees and the strings of money depicted on the front showed the value. Paper money meant merchants did not have to carry bulky coinage. However, successive Chinese emperors overprinted notes to raise funds and by the time the Ming Dynasty finally suspended issuance in 1425, their circulating certificates were worth only a seventieth of their original value.

Real de a ocho, 1762

Real de a ocho, 1762

The Spanish name real de a ocho means “pieces of eight”. In the late 16th century silver reals were widely used for exchange, underpinning the first trading networks between the Americas, Europe and Asia. The coins were minted in the Bolivian city of Potosi in Spain’s New World Empire, from locally mined silver. Shipped across the Andes by llama in a two-month trek they were then loaded on to ships bound for Europe and China, which became known as the world’s silver sink because of its demand for the commodity. Silver had displaced bronze and paper as the payment of choice and merchants liked reals because they held their value. They continued to be used until well into the 19th century, particularly in China’s more commercially driven southern and eastern provinces.

Sycee

Sycee

By the 19th century, China’s currency system was a confusing mix of coins, some foreign, some local, plus a large number of competing bank notes and un-minted bullion called sycee. These “shoes”, as the British called them, were unfamiliar to foreign merchants. Particularly bewildering was the way their value could vary wildly from one town to the next. This was because sycee was produced by private mints, but had to be valued by an assayer before it could be used as money. The curved stamp at the top of this ingot shows it came from a foundry in Shanghai. Further down, the assayer has marked its weight and finesse in ink. Should the sycee be taken to another town, this would have been rubbed off and a new assayer assigned to value it. It was a costly and time-consuming process and when HSBC opened its first branch in Shanghai, it built vaults to hold up to 1,350 tonnes of silver. In 1912, the Qing Dynasty collapsed, ending 2,129 years of Imperial rule and the Republic of China was born.

Specimen HKD5 note for The Hong Kong & Shanghai Banking Corporation, 1922

Specimen HKD5 note for The Hong Kong and Shanghai Banking Corporation, 1922

The lack of a single monetary authority led many private banks to begin issuing their own notes towards the end of the 19th century. This one from 1922 was prepared for HSBC’s branch in Peking (modern-day Beijing). The share of bank notes and deposits in the M1 money supply rose from one third at the turn of the century to two thirds by 1926.

Five yuan note, 1956

Five yuan note, 1956

There have been five series of China’s modern bank notes since they were first issued in December 1948. This one is from the second series in 1956. Having defeated the Nationalists, the new Communist government wanted to draw a line under hyperinflation, which had plagued the country during the civil war. Hence, these new notes were re-valued to the old at a ratio of 10,000 to one. As the people’s currency, it was also important to depict workers on the design. This one shows unity within the People’s Republic of China (PRC) and carries text in Tibetan, Mongolian and Uighur as well as Chinese. When the fifth and final series was issued in 1999, all notes also showed the PRC’s founder, Chairman Mao Tse-tung.

Foreign Exchange Certificate, 1980s

Foreign Exchange Certificate, 1980s

In 1978, China’s leader Deng Xiao-ping launched an open-door policy, which started the country’s economic transformation. But strict exchange controls meant foreigners were forbidden to handle RMB. Instead, China introduced Foreign Exchange Certificates (FECs) for use in designated restaurants and friendship stores. The latter accepted only FECs, preventing ordinary Chinese citizens from purchasing the luxury items they stocked. FECs were phased out in 1995.

 

Related content

A street in Hong Kong

RMB: breaking down barriers

30 May 2013

The renminbi is on course to become a major currency and financial centres …

Week in China: Packet money

01 Mar 2013

The Chinese practice of handing over red envelopes to friends and…