History of Chinese Currency

Cowrie shells used as dice for games of chance in Tamil culture சோழி/சோவி. This throw indicates a roll of 3. Image by Sodabottle available under a Creative Commons license

Chinese currency

China has a very long tradition of using coins. The same design of coinage lasted 2,000 years and it was the first country to introduce paper money. Other forms of currency have been used; particularly in foreign trade a 'bolt of silk' had a standard monetary value; government officials used to be paid with hundredweights of rice (Chinese measure dàn ). For many centuries remote communities bartered crops at markets rather than using 'money'. The quality and value of coinage reflected the fortunes of the ruling dynasty; its decline was often signaled by the use of devalued and debased currency.

Cowrie shells

Cowrie shells were used as currency back in the Shang dynasty. The cowrie can still seen in characters for precious things; Bèi [Old form ] means shells or valuables. The character is used as a radical is used in the Chinese words for jiàn (cheap; worthless) guì (precious; expensive; honorable); mǎi (buy) [Old form ]; mài (sell); (bestow) and cái (riches; valuables). The shells probably came from either the South China Sea or the Indian Ocean. As they are rare and do not occur in China the amount of money was under tight control. Cowrie shells continued to be used in remote south western areas as late as the Ming dynasty.

Cash coins

Bu coins (spade money) of the Zhou Dynasty, China. Image by Zhou Yi, Dser available under a Creative Commons license

As far back as the Western Zhou dynasty [c. 1000BCE], China used metal coins. Advanced Chinese bronze workmanship gave the necessary technology for the accurate casting of coins. As many as 80 coins were cast at a time using a mold made of clay, stone, bronze or sand. The individual coin molds were interconnected in the form of a 'coin tree'. Initially bronze replicas of cowrie shells were produced before going on to produce castings of small spades (bubi 布币) and knives (daobi ). Another form used in the Warring States period was round money: yuan qian with a round hole, probably modeled on jade ‘bi’ rings.

Ancient Chinese coins. Image by mc559 available under a Creative Commons license

Qin Dynasty Emperor Shihuangdi standardized money, along with everything else, when he introduced the ban liang 'half tael' (equivalent to 12 zhu) coin. It had a standard weight in the form of a round disc with a square hole. This shape of coin remained in use up to the 20th century. He also divided all currency between gold : shang bi and bronze: xia bi . The square central hole allows the coins to be conveniently and safely strung together; it also symbolizes the union of heaven (round) and earth (square). The earlier knife and spade currency often had a hole for the same reason. The copper coins were cast in a bronze mold and had two or four characters inscribed on them. A thousand coins strung together divided into ten groups of 100 were the next unit of currency as ‘a string of cash’ diào. The string would be braided rather than a single linear string. However care was needed as unscrupulous traders would use only 99 down to 83 coins instead of 100.

wuzhi coin, money, coin
Ancient Chinese coins. Image provided by David Hartill
è guàn mǎn yíng [e guan man ying]
evil string of cash everywhere full
If evil was put like discs on a string it would be always be full. Traditionally coins had holes in them and they were strung together.
Evil is all around

As with many other Qin reforms the following Han dynasty revised rather than replaced the currency. A much lighter coin, the wu zhu was introduced in 118BCE, retaining the same shape with a standard weight [a Zhu is a standard weight]. The value was fixed so that 1 jin of gold coins was equal to 10,000 bronze wu zhu coins.

However, during the Han dynasty the weight of the ban liang coins diminished to in some cases 1/30th of the weight they should have been and a variety of forms were produced. Emperor Liu Heng (Wendi) in 175BCE relieved a shortage of coins by licensing private mints, bringing great wealth to owners of copper mines, who then flooded the market which inevitably led to a devaluation of the currency. Emperor Wudi (187-180BCE) reintroduced the state monopoly and licenses for minting coins, but much illegal coinage was still produced. As a desperate measure Wudi introduced money made from pieces of skin from rare white stags so he had the monopoly of its supply. This novelty soon failed so he then introduced silver alloyed with tin as 'white coins'. The circulation of illicit coins was eventually solved by restoring parity of value for their weight in copper.
wuzhi coin, money, coin
Ancient Chinese coins. Image provided by David Hartill

Wang Mang introduced standard exchange rates between cowrie shells, bolts of cloth and other currencies. He insisted all gold was exchanged for copper. He amassed more gold than was at that time in the whole of Europe and this was one reason that Emperor Tiberius forbade the purchase of silk with gold. However his tight control over money supply restricted economic activity. He introduced many new types and values of coins including some fine, high value coinage in the shape of knives inlaid in gold. When the Eastern Han dynasty ousted Wang Mang the range of coinage was simplified and the wuzhu was re-established as the chief coinage.

qian,money The character for money is qián it is composed of two elements: the radical on the left side is for gold; metal: and the right part is for spear: ; together they give the impression of metal being split up which is very appropriate for metal coins.

In the following Period of Disunity small kingdoms and short lived dynasties created their own coinage. At the time of the Sui second unification of China, Emperor Wendi reintroduced a standard Wuzhu coin - the Sui Wuzhu . Wudi minted the kai yuan tong bao which was no longer of standard weight, they were also known as tong bao , zhong bao or yuan bao . So, the 700 years of Wuzhu coins came to an end, where the value of the coin was simply value of the metal it was made from. The new coins were in use for 200 years and used in Japan, Korea and Vietnam. By 850CE (Tang dynasty) eight copper mines provided all the copper for coinage. A hundred mints busily produced 327,000 strings of 1,000 cash coins. Each string weighed 6.4 pounds and was roughly equivalent in value to a liang (an ounce) of silver or a bolt of silk or a bushel of grain. Coinage began to generally replace the 'bolt of silk' as a unit of currency.

fēn qián, fēn huò [yi fen qian, yi fen huo]
one penny, one portion goods
With only a penny you can't buy much
You cant buy something for nothing
You get what you pay for

After more chaos in the Five Dynasties period, the Song dynasty introduced a great many variations of the tong bao coinage. By the year 997CE 800 million coins were produced each year: 2.5 times that made during the Tang. By 1085CE this had grown dramatically to 8 billion coins. The following Mongol dynasty used mainly paper currency and some silver; but ordinary people continued to use tong bao coins; some of which were in brass rather than bronze. When the Ming dynasty took over in 1368, the rulers moved back to greater reliance on coinage and established controlled mints producing bronze coins in five denominations (1;2;3;5 and 10). In 1375CE the weight and composition (100% copper) were stipulated. For larger denominations the Ming used silver rather than paper currency. Reforms during the early Qing dynasty standardized 1,000 cash coins to be worth the same as one tael (liang) of silver.

The currency system broke down towards the end of the Qing, one importance reason was that the Taiping Rebellion broke the supply of copper from mines in the south. The Taipings minted their own coinage during the Rebellion. At the same time the modern European minting machines replaced traditional casting in coin manufacture. The Republic of China finally ceased producing the standard round design with a square hole in favor of a plain disk.

wuzhi coin, money, coin
A wide selection of different types of Chinese coins. Image provided by David Hartill

Silver money

The Chinese silver ingot was in the form of a boat or shoe and known abroad as or 'sycee ' or in northern China as yuánbǎo. Very few were produced compared to coins and they were cast by hand. Gold and silver were normally traded by weight and not minted as coinage, they were reserved for making jewelry and ornaments. Use of silver increased during the Song dynasty; by 1120CE a total tax of 18 million ounces of silver was collected. In the Ming dynasty an increased supply of silver reached China from Mexico and South America through trade with the Spaniards, and the Spanish Peso was accepted as currency in ports engaged in foreign trade. Emancipation of silver miners in South America led to shortage of supply of silver in the later Qing dynasty, this was one reason why opium became a trading commodity.

Yǒu qián néng shǐ guǐ tuī mò [you qian neng shi gui tui mo]
have money can send devil push grindstone
If you have money you can make the devil push a grind stone
Money can buy you anything
Wed 30th Aug

Ban on lunchtime booze

Arguably Guizhou's most famous export is Maotai liquor. It's a potent distilled spirit made from fermented sorghum and often used for toasts at banquets for visiting dignitaries. It's also very expensive.

Now the central government has put on a ban for Guizhou local government employees from taking a lunchtime tipple. Not just maotai but all alcoholic drinks are banned - unless special dispensation is given. It's part of a government initiative to improve efficiency in local government. It's no longer going to be acceptable to doze through the afternoon in a semi-drunken stupor!

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Chinese Paper money

A note for 1000 cash issued between 1368 and 1399. 34x22.5 cms. Printed in black on paper with red seal impressions for extra security. “By the time this note was issued, seal impressions and printing, once identical, had become as clearly distinguished as our postmark and postage stamp are today.” (Carter) Image by Chris55 available under a Creative Commons license

Paper money came into use in the Tang dynasty as a larger denomination of currency to replace the bulky ‘bolt of silk’. Originally paper money was really just an official printed receipt and it was called ‘Flying money’. It was far more convenient and safer to transport compared to carrying a vast weight of strings of coins or bolts of silk for large transactions. The money was printed in color on special paper and was given a limited life: it had to be replaced or exchanged within three years. It was initially mistrusted when it was brought in by Wang Anshi. By the end of the Song dynasty paper money equivalent to 70 million strings of cash were being printed and became preferred to coins; the rulers imposed tight control over the supply of paper money so it could be trusted by the people. The Yuan dynasty tried to maintain the paper currency but inflation proved ruinous.

The modern paper currency is the rénmínbì 'People's Currency' and is denominated in yuan (CN¥) yuán which is subdivided into 10 jiǎo also known as ( máo). Each jiao is subdivided into 10 fēn. Most money is in the form of paper notes but coins are used for denominations of 1 yuan and less.

Myths and Legends

“Money Tree”, an ancient Han Dynasty Chinese sculpture. Photographed by Conrad Shultz at the Asian Art Museum of San Francisco on 7th Oct 2007 Image by Shultzc available under a Creative Commons license

Coins were worn as amulets around the neck to ward off demons. This practice started in the Han dynasty and special coins were minted as charms. Reproductions of the Han dynasty wuzhu in gold, silver, jade and bronze are very common amulets. The ancient spade and knife money were also reproduced as potent charms. The ancient jade round coin with a round hole the is often used as an emblem to bring luck to shops. Money has featured heavily in Chinese symbolism, qián (money) has the same sound as qián (before) so symbols of 'before' are used to refer to money. Similarly eye ( yǎn (yan) is also the name for the square hole in the coin, so a reference to an eye may refer to money. Coins were made specially for use in Yi Jing consultations.

Legends about money trees go back to at least the Three Kingdoms period, shaking the tree would bring a shower of copper coins. Decorative objects were made into the shape of a money tree. ‘Shaking the Money Tree’ is a popular opera often performed by children. The plot of the opera has a celestial lady in waiting coming down to earth to enjoy worldly life but the supreme lord has her dragged back up to heaven.

Specially printed symbolic money is used in ancestral rites and festivals. There is a ‘Bank of the Underworld ’ that is featured on the notes. Money is often presented in a lucky red envelope. Some of this symbolic money is produced just so it can be ritually burnt (particularly at funerals). At weddings the bride was pelted with special coins with suitable best wishes for the marriage.

hell money, Spring Festival
Special 'Hell money' used for burning at Chinese New Year
Tue 12th Sep

Mulberry bark money

Among the most influential inventions of the Chinese has been paper money. While the rest of the world was lugging around silver and gold China had made the break in the Tang dynasty around 800CE. In China the problem was that normal coinage was in standard bronze discs. The coins had a hole in the middle so they could be strung together in groups of 100. A string of cash was a heavy and inaccurate unit of currency (some traders would claim a 'complete' string which would only have 65 coins). How much better to carry around IOUs rather than cash? As long as the IOU was unequivocally signed by a reputable merchant it was just as valuable as thecoins it represented.

The problem of metal coins was particularly acute when the government forced Sichuan province to use iron coins. As soon as the government saw that the system of IOUs was working well they of course stepped in and made it a government monopoly.

At the same time counterfeiters threatened the new currency and for that reason in the reign of Kublai Khan (1279-1294) Marco Polo witnessed the use of money in the form of strips of black mulberry bark which was then marked with the red seal of the Emperor (only the Emperor was allowed to write in vermillion ink). The bark had to be specially processed and so the notes were hard to forge. An even rarer form of currency had been attempted much earlier in the Han dynasty (175 BCE) when Emperor Wudi introduced money made from pieces of hide from rare white stags.

As the issuing of paper money did not have to be backed by actual silver and gold the modern system was born where a government can just print money to get itself out of (or into!) financial difficulties.

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Citation information: Chinasage, 'History of Chinese coins and paper money', last updated 3 Dec 2016, Web, http://www.chinasage.info/money.htm.

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