The currency issued by the Yuan was the world's first fiat currency, known as Chao. Every paper currency that the Chinese ever implemented failed.
During the early Song dynasty (Chinese: 960-1279) 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 using its own heavy iron coins which continued to circulate for a short period into the Song dynasty. By 1000 unification was complete and China experienced a rapid period of economic growth. This was reflected in 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 often exported to Inner Asia, Japan, and South-East Asia where they often formed the dominant form of coinage. Song merchants rapidly adopted forms of paper currency starting with promissary notes in Sichuan called "flying money" (feiqian). 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 twelfth 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, qianyin, kuaizi, or guanzi.
The Mongol-founded Yuan dynasty (Chinese: 1271-1368) also attempted to use paper currency. Unlike the Song dynasty they created a unified, national system that was not backed by silver or gold. The currency issued by the Yuan was the world's first fiat currency, known as Chao. The Yuan government attempted to prohibit all transactions in or possession of silver or gold, which had to be turned over to the government. Inflation in 1260 caused the government to replace the existing paper currency with a new paper currency in 1287, but inflation caused by undisciplined printing remained a problem for the Yuan court until the end of the Dynasty.
Silver sycee (yuanbao) ingots
The early Ming dynasty (Chinese: pinyin: Míng, 1368-1644) also attempted to use paper currency in the early re-unification period. This currency also experienced rapid inflation and issues were suspended in 1450 although notes remained in circulation until 1573. It was only in the very last years of the Ming dynasty when Li Zicheng threatened Beijing in 1643 and 1644 that printing took place again. For most of the Ming China had a purely private system of currency for all important transactions. Silver, which flowed in from overseas, began to be used as a currency in the Far South province of Guangdong where it spread to the lower Yangzi region by 1423 when it became legal tender for payment of taxes. Provincial taxes had to be remitted to the capital in silver after 1465, salt producers had to pay in silver from 1475 and corvée exemptions had to be paid in silver from 1485. The Chinese demand for silver was partially met by Spanish imports from the Americas, in particular Potosi in Peru and Mexico, after the Spanish became established at Manila in 1571. However the silver was not minted. It circulated as ingots (known as sycee or yuanbao) which weighed a nominal liang (about 36 grammes) although purity and weight varied from region to region. The liang was often referred to by Europeans by the Malay term tael.
Late Imperial China maintained both a silver and a copper currency system. The copper system was based on the copper cash (wen). The silver system had several units which by the Qing Dynasty were: 1 tael = 10 mace = 100 candareens = 1000 li (silver cash).
In 1889, the Chinese yuan was introduced at par with the Mexican Peso and was subdivided into 10 jiao (not given an English name, cf. dime), 100 fen (cents), and 1000 wen (cash). The yuan was equivalent to 7 mace and 2 candareens (or 0.72 tael) and, for a time, coins were marked as such in English.
The earliest issues were silver coins produced at the Kwangtung mint in denominations of 5 fen, 1, 2 and 5 jiao and 1 yuan. Other regional mints were opened in the 1890s producing similar coins. Copper coins in denominations of 1, 2, 5, 10 and 20 wen were also issued. The central government began issuing its own coins in the yuan currency system in 1903. Banknotes were issued in yuan denominations from the 1890s by several local and private banks, along with the "Imperial Bank of China" and the "Hu Pu Bank" (later the "Ta-Ch'ing Government Bank"), established by the Imperial government.
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