World money. China

China is one of the world’s oldest states and has a rich history. A number of significant inventions come from this country, its traditions are widespread across the world, while its economy is today among the strongest in the world. China is a state that has probably contributed the most to monetary history. So, here are 10 facts about Chinese money.

  • China’s monetary history dates back to 3,000 years ago. Of course, it began with various goods (blocks of pressed tea being especially important), tools, animals, etc. But in the Neolithic period the first primitive monetary unit — cowrie shells —appeared. For thousands of years they were the primary means of settlement, while their importance is even reflected in Chinese writing. The Chinese hieroglyphs for goods (貨), to buy/sell (買/賣), and trader (販) consist of several parts, one of which is 貝, meaning ‘cowrie’.

 

  • The first metal money appeared in China circa 11th c. BCE. With cowries in short supply (and given how fragile and non-durable they are), copies of the shells began to be produced from stone, bone, clay and, most importantly, metal (bronze). Bronze became the major material in trading. Circa 1200 BCE, metal money in different, even stranger forms — such as bronze knives and spades — appeared.

 

  • The first round coins originated in China (and around the world) circa 10th c. BCE. They were made from bronze. However, they were only a version of money, rather than legitimised legal tender. Round coins ultimately ousted differently shaped money in the 3rd c. BCE. They had holes in the middle of them and used to be hung on a string. Their standard size was 1,000 coins (about 50 g of pure silver in value). Such a coin design survived until the early 20th c.

 

  • In addition, the first paper money originated in China. Large quantities of coins or metal were too heavy, which is why there was a need for substitutes. The first idea to make money lighter originated in China in the 2nd c. BCE, when it was attempted to produce leather money. Paper money began to be printed in the 11th c. Such money was only used by merchants. Coins were given to a reliable person who would offer a paper substitute and the money could be reclaimed against it later. While it was not legal tender, it was widely used by merchants. Due to its lightness, money was even called ‘flying money’. The 13th c. traveller Marco Polo brought paper money to Europe, but the production of paper money only spread here in the 17th c.

 

  • The first paper money issued by a state decree and not backed with gold reserves also came from China. In the 13th-14th c. the state tried to issue such paper money, but its production discontinued due to inflation.
  • Interestingly, China only started using silver as legal tender from the 15th c.; moreover, in the beginning, silver coins were not minted and only silver bars were used. In the 17th c., silver coins — yuans — were minted (yuan means ‘round’).

 

  • At the end of the 19th c., the then Empire of China pushed through a money reform and adopted a single currency — the yuan. It is interesting to note that it was made equivalent to the Mexican peso, which was then widely used in Asia and at that time was one of the world’s strongest currencies. The yuan was equivalent to 10 jiao, 100 fen and 1,000 ven. Yuan banknotes were also issued.

 

  • During the period of the Republic of China (the first half of the 20th c.), the regions of China started issuing their own money; the government issued the silver dollar as the official currency, but its use did not catch on. The eruption of the Communist revolution in 1948 brought changes into the monetary system.
  • Today, China’s money is called renminbi, which literally means ‘people’s money’. The yuan is the basis of this currency and also its international name. 1 yuan is equivalent to 10 jiao and 100 fen.

 

  • In addition to China, there is one more state that officially uses Chinese yuan as its currency. And that state is … Zimbabwe! Due to its complicated financial situation, this country does not have a national currency; hence it uses many different currencies (the US dollar, Indian rupee, etc.). In order to expand trade with China, in 2015 the country declared its official currency to be the Chinese yuan. The yuan is unofficially used in other countries: China’s regions of Macao and Hong Kong, Mongolia, Myanmar, North Korea, Vietnam.
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