History of Chinese currency
The history of Chinese currency spans more than 3000 years from ancient China to imperial China and modern China. Currency of some type has been used in China since the Neolithic age which can be traced back to between 3000 and 4500 years ago. The history of China's monetary system traces back to the Shang dynasty, where cowrie shells served as early currency. Cowry shells are believed to have been the earliest form of currency used in Central China, and were used during the Neolithic period. By the Warring States period, diverse metal currencies like knife and spade coins emerged. These early currencies, starting as a commodity exchange to cowrie shells, copper coins, paper money and modern Chinese currencies and digital currencies shows how centralized power developed the most influential monetary system in the world.
Early Establishment
The Shang dynasty came as a significant first step in the evolution of currency by introducing cowrie shells as a mode of exchange. Cowries, sourced from the Indian Ocean, were valued for their rarity, durability, and portability. Their usage as currency likely came from their symbolic value which represented wealth and status. Archaeological findings, such as cowrie shell imitations made of bone and stone, indicate the growing institutionalization of monetary practices during this period. One of the reasons why they started producing cowrie shell imitations was mainly due to the lack of organic cowrie shells. New Research on the Origin of Cowries in Ancient China by K.Peng also mentions tributes and exchanges involving cowries, highlighting their role in economic context.
Zhou dynasty and ) saw the diversification of currency forms. By the late Western Zhou and early Eastern Zhou, bronze objects such as spades and knife-shaped coins began circulating alongside cowries. These currencies reflected both regional economic diversity and the growing influence of metalworking technologies.
The Warring States period expanded on the diversity of currencies as competing states issued their own coinages to assert economic independence. Bronze inscriptions on Zhou coins serve as primary evidence which gives details about issuing authorities and intended denominations. These inscriptions show the relationship between political authority and economic systems.
Qin dynasty specifically Around 210 BC, the first emperor of China Qin Shi Huang abolished all other forms of local currency and introduced a uniform "Ban Liang" copper coin which eliminated the regional variations that had characterized the Warring States period and showed economic integration and simplifying taxation. Qin legal texts found in tombs document the implementation of the Ban Liang coins and highlight their role in centralizing economic control. This standardization served as a model for future dynasties that influenced monetary policies in subsequent centuries.
Building on the Qin's monetary reforms, the Han dynasty later introduced "Wu Zhu" coins, which remained in circulation for over 700 years. The Han government's emphasis on coinage stability facilitated trade along the Silk Road, integrating China into a broader network of Eurasian commerce. These coins, marked by their consistent weight and size, reflected the dynasty's commitment to economic stability. The Han period also saw the integration of commodity trade and currency usage. Goods like silk, salt, and iron often supplemented or substituted coinage in transactions, particularly in regions where coin circulation was limited.
Paper money was invented in China in the 7th century, but the base unit of currency remained the copper coin. Copper coins were used as the chief denomination of currency in China until the introduction of the yuan.
From paper money innovations in the Song dynasty to the turbulent reforms of the late Qing, China's monetary system evolved with its political and economic changes. Currently, the renminbi is the official currency of the People's Republic of China. It is the legal tender in mainland China, but not in Hong Kong or Macau. The special administrative regions of Hong Kong and Macau use the Hong Kong dollar and the Macanese pataca, respectively. In the territory controlled by the Republic of China, the New Taiwan dollar is the official legal tender in Taiwan since 2000.
Ancient currencies
The use of shell money is attested to in the Chinese writing system. The traditional characters for 'goods', 'buy/sell', and 'monger', in addition to various other words relating to 'exchange', all contain the radical 貝, which is the pictograph for shell. The extent of the circulation of shell money is unknown, and barter trade may have been common. However, copies of cowry shells made out of bone, wood, stone, lead and copper were common enough to presume that they were used in trade.Cowries, sourced from the Indian Ocean, were valued for their rarity, durability, and portability. Their usage as currency likely came from their symbolic and practical value which represented wealth and status. Archaeological findings, such as cowrie shell imitations made of bone and stone, indicate the growing institutionalization of monetary practices during this period. One of the reasons why they started producing cowrie shell imitations was mainly due to the lack of organic cowrie shells. New Research on the Origin of Cowries in Ancient China by K.Peng also mentions tributes and exchanges involving cowries, highlighting their role in both economic and ceremonial contexts.
The Chinese may have invented the first metal coins, coins found in Anyang date to before 900 BC. At that time, the coin itself was a mock of more earlier used cowry shells, so it was called the Bronze shell.
Bronzed shells were found in the ruins of Yin, the old capital of the Shang dynasty. Bronze became the universal currency during the succeeding Zhou dynasty, which saw the diversification of currency forms. By the late Western Zhou and early Eastern Zhou, bronze objects such as spades and knife-shaped coins began circulating alongside cowries. During the Warring States period, from the 5th century BC to 221 BC, Chinese money consisted of three main types of bronze objects. The Zhou, the Wei, the Han and the Qin all used coins shaped like a spade. The Qi used money in the shape of a knife. The Zhao and the Yan used knife money before switching over to spade money roughly halfway through the Warring States period. The Chu used money in the forms of "ant nose" coins.
Unification
As part of the Unification of China, Qin Shi Huang introduced a uniform copper coin with the inscription "Ban Liang" based on the coins previously used by the Qin. All other forms of local currency were abolished. This standardization eliminated the regional variations that had characterized the Warring States period, fostering economic integration and simplifying taxation. Qin legal texts found in tombs document the implementation of the Ban Liang coins and highlight their role in centralizing economic control. The coins were round with a square hole in the middle which was the common design for most Chinese copper coins until the 20th century. Due to the low value of an individual coin, the Chinese have traditionally strung a nominal thousand copper coins onto a piece of string. Government taxes were levied on both coins and products such as rolls of silk. Salaries were paid in "stones" of grain during the Qin and Han dynasties.Han
The Han dynasty issued Wu Zhu coins, which remained in circulation for over 700 years. The Han government's emphasis on coinage stability facilitated trade along the Silk Road, integrating China into a broader network of Eurasian commerce. These coins were marked by their consistent weight and size. The Han period also saw the integration of commodity trade and currency usage. Goods like silk, salt, and iron often supplemented or substituted coinage in transactions, particularly in regions where coin circulation was limited.Tang
By the time of the Tang dynasty, the solidification of Confucianism as the primary political school of thought had similarly entrenched China as an agrarian society. The Han dynasty had allowed for debate on government monopolies on the iron and salt trade, to which scholars voiced disapproval due to disreputable connotations on industry and commerce. Under the Tang dynasty, China saw the enactment of the two-tax system, or 两税法, that measured revenues against expenditures directly. As a result of policy, the dynasty set a static budget that was intended to be observed throughout the dynasty.The Tang dynasty adopted an early prototype of paper currency starting with promissory notes in Sichuan called "flying money". These were designed to expedite trade between the Tang capital and urban centers, and the rural industrial bases, such as the mining of copper and iron in Sichuan. By issuing Feiqian, the Tang dynasty was able to lessen the burden and risk of transporting large amounts of currencies, such as the accumulated weight and the potential to be robbed in transit. Although they were traded among merchants, Jiaozi was not intended to be currency, but rather akin to modern day bank drafts. They could only be redeemed at government offices or the centers of government sponsored groups. These proved so useful the state took over production of this form of paper money with the first state-backed printing in 1024. By the 12th century, various forms of paper money had become the dominant forms of currency in China and were known by a variety of names such as jiaozi, huizi, kuaizi, or guanzi.
Song
During the early Song dynasty, China again reunited the currency system, displacing coinages from ten or so independent states. Among pre-Song coins, the northern states tended to prefer copper coins. The southern states tended to use lead or iron coins, with Sichuan possessing its own heavy iron coins which continued to circulate for a short period into the Song dynasty. By 1000 CE, unification was complete and China experienced a period of rapid economic growth, reflected by the growth of coining. In 1073—the peak year for minting coins in the Northern Song—the government produced an estimated six million strings containing a thousand copper coins each. The Northern Song is thought to have minted over two hundred million strings of coins which were frequently exported to Inner Asia, Japan, and South-East Asia, where they often formed the dominant form of coinage.The Song dynasty saw the first true introduction of paper money as currency. This was termed Jiaozi, or 交子, and saw initial adoption in Sichuan to facilitate the commodity trade. As it started to expand outside of Sichuan, the Song dynasty saw an increase in inflation due to the overprinting of paper money that didn't have sufficient backing in reserve through precious metals. Later dynasties such as the Yuan and Ming saw similar cases of inflation that lead to the Ming and Qing returning to silver as the primary method of commerce.