Basics of Currency

To analyze China’s monetary forms scientifically, we must begin from a historical standpoint. The monetary forms examined in this chapter belong mainly to the period from the Opium War to the Chinese People’s War of Resistance against Japanese Aggression, though some reference beyond this range is unavoidable when present issues are considered. Over this long interval, China’s currency underwent major transformations, and no fixed perspective can capture its movement. I therefore adopt a developmental approach. Money originates from commodities and passes through distinct stages of development; its functions emerge gradually and change in character as social relations change. I first trace the historical relation between money and commodities, and then explain the sequential formation of money’s key functions—measure of value and standard of price, medium of circulation, hoarding, payment, and world money. Finally, I emphasize that the same “function” may differ in nature across different societies. Only after establishing this point can we properly investigate the specific forms of Chinese currency.