CHINESE COMMUNIST CURRENCY SYSTEMS 1932-1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R010900160004-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 14, 2016
• Document Release Date: May 2, 2002
• Sequence Number: 4
• Publication Date: March 7, 1952
• Content Type: REPORT

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FEB 1952
INFORMATION REPORT
REPORT NO.
CD NO.
COUNTRY China
SUBJECT
PLACE
Arne URFP)
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Chinese Communist Currency Systems
1932?1951
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CENTRAL I NLL QLnTAaY
SECURITY INFORMATION
DO t4O
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CIk-CULATE "REPORT NOT TO
F ENCLS.
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Comment, The currency system which the Chinese Communists have
eve oped has, from the viewpoint of the Chinese Communist regime,,
attained some measure of success, In the history of China, few regimes
have ever been able to give the country a unified currency. However,
certain phenomena still prevail within China in respect to her currency
system and its relation to monetary systems of other countries. Among
these are.
a. The love of gold and silver, which has a strong hold on the minds
of the people, although they do not hold any significant amounts
of the precious metals. Consequently, a black market in gold and
silver still exists on the China mainland, with rates about 20
percent greater than the official prices set by the Chinese Communists.
b, A lack of complete trust in the jen min p'iao currency by the
people, However, since it is the only legal-currency, they have
to use it as a medium of exchange.
c. Rigid control by the Chinese Communists over the issue and circula-
tion of jen min p'iao. Organizations of provincial grade cannot
pay more than JHP 100,000 in currency at any one time; if the
transaction is for a greater sum, it must be paid by check or bill.
The general'public, the peasants and workers, usually hold several
tens of thousands of jen min p'iao each in their possession at all
times,
d. Existence of black market rates of exchange between jen min p'iao
and foreign currencies. This occurs because merchants require
foreign exchange to do business, but are unable to obtain it from
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the government at the legal rate of exchange. Consequently,, they are
f willing to buy it on the black market at a premium prices The official
rate of Jon min p?iao with the Hong Kong-Dollar is HK$ 1 per JMP
3,880, but the black market rate at the end of January 1952 was
'nHK4 1 per JMP 4,,500,
Jon min pgiao has no value with respect to Chinese Communist trade
with the USSR and Eastern Europe; this trade is conducted on a
barter basis, or valuations are made in U.S. Dollars. This is
also true with respect to Chinese Communist trade with the
Democratic Republic of Vietnam (DRV) and India.
This outline covers only currency issues released by comparatively large
organizations (generally comparable to provincial currency issues) and
which were issued in substantial amounts. In addition, a number of
other currencies have been issued by smaller banks. The amount of these
issues was small (less than 100,000 silver dollars each) and they cir-
culated in limited areas (one to five hsien) a Examples of these issues
are the Central_Kiangsu Currency which circulated in the Huaiyin ( )
area and the Nan Fang (it A ) Currency,, which circulated in the Swatow-
Chaochou area of Kwangtung. The Chinese Communists currency system was
unified in October 1951, and since that time only one type of currency,,
Jon min peiao,, has been circulating throughout China, This report out-
lines-the history of Chinese Communist currency from 1932 until October
1951.
19 The first monetary system adopted by the Chinese Communists was the
Essential Goods Standard ( 4 i )9 which had the following
characteristics.
a. It was entirely independent of gold and silver, and neither was
used as reserves for currency issues. Consequently, the Essential
Goods Standard was not affected by price fluctuations of gold and
silver in the international market.
b. The security for the currency issue was food supplies,, cotton
cloth,, essentials of livelihood and supplies for production held by
the Sovieto
ce 'The value of the jen min pViao would be the average value of a number
of commodities. outside the Soviet areas, the value of this currency
-would be based on its internal value, i.e. the internal value: would
stabilize the external value.,
system would be integrated with the political situation of the Soviet
areas.
The first Chinese Communist notes were issued on 7 November 19310 These
banknotes were issued by the National Bank for the Chinese Soviet Republic,,
which the government,, organized by'CHU To and MAO Tse-tung at Juichzn,,
had founded. The Hunaniupeh Kiangsi Provincial Industrial and Farmers
Bank and the Fukieh-Chekiang-Kiangsi Provincial Soviet Bank separately
issued bank notes in 1932. (At this time there was also a small coinage
of silver, but this occurred only once), These three currencies were not
in general circulation but were only barely negotiable in the Soviet areas.
These banknotes lost all their value when the Red Army left Kiangsi
Province on the Long March in October 19314.
Ten varieties of banknotes were issued in different Chinese Communist-
controlled areas between 1938 and 1948, after the Communists had established
themselves in the %sii a. These weres
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a. Shensi-KansuNingsia Border Area Currency, issued in 1938 by the Shensi-
KansuNingaia Border Areas Bad. It circulated in the Shensi-Kansu-
Ningsia border area.
b. South Hopeh Currency., issued in 1939 by the South Hopeh Bank, It
circulated in the ShansiHopeh-Shantung: Honan liberated areas,
o. Chungchou Currency., issued in 1940 by the Chungchou (+ 1)11) Bank.
It circulated in the Chungryuan ( 'R, ) liberated area.
d. Pei Hai Currency., issued in 1941 by the Pei Hai Bank. It circulated
in the East China liberated area.
ee Hua Chung Currency, issued in 1942 by the Hua Chung ( ) Bank,
also known as the Central China Bank. It circulated in the Kiangsu-.
Anhwei liberated areas.
f. Northwest Farmers Currency, issued in 1943 by the Northwest Farmers
Bank, It circulated in the Shansi-Suiynan border areas.
g. Shansi-Charhar Hopeh Border Areas Currency,, issued in 1943 by the
Shansi-Charhar?-Hopeh Border Areas Bank. It circulated in the.Shansi-
Charhar-Hopeh border areas.
h. Changcheng Currency,. issued in 1944 by the Changcheng (' , ~A }
Bank. It circulated in the Hopeh-Charhar-Jehol-Lis ring border areas.
is Kwantung Currency, issued in 1947 by the Kwantung ( , } Bank.
It circulated in the Port Arthur and Dairen areas.
Northeast Currency, issued in 1947 by the Northeast Bank. It
circulated in the Northeast liberated areas.
The Chinese Communists called this currency situation one of "Multi-
issues." By 1948 with many types of banknotes circulating within Chinese
Communist-controlled areas, there were different values at different
places, and no uniform rates for convertibility had been established.1
4. The Chinese Communists called a "Liberated Areas Joint Finance Meeting"
at Shihchiachuang (11428, 38-02) in 1948. At this meeting it was decided
to establish the People's Bank of China, and to unify the currency issue.
As a result, jen min p91ao was issued in December 1948 and placed in
circulation. Since 1949 jen min pQiao has been the basic currency, and
local currencies have been collected in exchange for jen min paiao.
a. The first collection of local currency in exchange for Jon min peiao
was made in 1948, when Shensi-Kansu Ningsia Border Areas Currency
was taken from circulation. Four more local currencies were removed
from circulation between December 1948 and January 1949, at the
following rates of exchanges
JMP 1 for 100 units of South Hopeh Currency
JMP 1. for 100 units of Psi Hai Currency
JMP 1 for 1,000 units of Shansi-Charhar Hopeh Border Area,
currency
JMF 1 for 2.,000 units of Northeast Farmers Currency.
b. Further steps to consolidate the currency issue were taken as the
Communist armies continued their southward march and crossed the
Yangtae, In February 1949 Changcheng Currency was absorbed into
Northeast Currency, and at the same time a standard exchange rate. of
1,000 units of Northeast Currency per JMP 1 was established. In May
1949 Hua Cheng Currency (also known as Central China Currency) was
removed from circulation at an exchange rate of JMP 1 per 1,000 units
of Hua Cheng Currency, In November 19119 Chungchou Currency was removed
from circulation at the rate of JMP 1 per 3 units of Chungchou Currency.
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By the end of 1949 the number of currencies circulating in Communist-
controlled areas had been reduced to threes Jon min p'iao,.North-
east Currency, and Kwantung Currency.
e. The trend toward unification of the currency system was temporarily
reversed with the issuance of two additional local currencies. The
der Mongolia People's Bank issued Inner Mongolia Local Negotiable
Notes in 1949, and the Sinkiang.People's Bank issued Sinkiang Local
Notes in 1950.2
When the Communists had occupied all of mainland China, they started to
collect Kuomintang. (KNIT) Chin Yuan ( ) ) Notes (Gold Yuan) and the
Yin Yuan ( lit ) Notes (Silver Yuan 3). This collection was made first
in six major cities under the retext of taking care of the people's
livelihood in the Kuo Tung (14 ht ) Areas, (former KMTmcontrolled areas)
Wei. Wu Erh Wen People's Currency.
permitted to circulate until 31 July 1951.
In October 1951 the GAG decided to remove the notes issued by the
Sinkiang People's Bank from circulation. At the same time, however,
., , ) People's Currency for
they issued Wei Wu Erh Wen (# *_.k,
circulation within Sinkiang. Wei Wu Erh Wen Peopleaa Currency was
put into circulation at the rate of 1 unit per JMP 1. The notes
ieaued by the Sinkiang People's Bank were exchanged for either Jon
min p' iao or Wei Wu Erh Wen Peoples Currency at he rate of 1 unit
of Sinkiang Local Negotiable Notes per 350 units of jen min p'iao or
the period 1 April to 1 June, but Inner Mongolia Negotiable Notes were
Currency from circulation. During April9 Northeast Currency was
allowed to circulate, or could be exchanged fo? jen min p'iao at the
rate-'of JMP 1 per 1,000 units of Northeast Currency. The-period for
exchanging Northeast Currency for Jon min p'iao was continued until
31 May, but the circulation of Northeast Currency was not permitted
after 30 April.
.Also in April 1951 the People's Bank of China began to remove Inner
Mongolia Negotiable Notes from circulation. They were exchanged at
the rate of JMP I per 9l units of Inner Mongolia Negotiable Notes for
COUgNTIAL
In Tientsin, collection was made during a one-month period in Janua gr
1949 at the rate of JMP 1 per 6 units of Chin Yuan Notes.
In Peiping, collection was made during a one-half month period in
February 1949 at the rate of JMP 1 per 10 units. of Chin Yuan Notes.
In Nanking, collection was made during a 10-day period in April
1949 at the rate of JMP 1 per 2,500 units of Chin Yuan Notes.
In Shanghai, collection was made during a six-clay period in May
1949 at the rate of JMP 1 per 100,000 units of Chin Yuan Noteso
e, In Canton, collection was made in February 1950 at the-rate of JMP
1 per 1,500 units of Yin Yuan Notes.
In Chungking, collection was made in March 1950 at the rate of JMP 1
per 100 unfits of Yin Yuan Notes. 4
Progress toward unifying the currency issue was resumed in 1950, when the
following steps were taken.
a. The Government Administration Council (GAC) ordered the Northeast
People's Government in June 1950 to collect Kwantung Currency and
remove it from circulation. It exchanged at the rate of 270 units
of Northeast Currency for 1 unit of Kwantung Currency.
be In.April 1951 the People's Bank of China began to remove Northeast
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le ~~ Comment. This situation was inevitable. Since the Chinese
ommunist-occupied areas were not coordinated or unifieda it was
impossible to standardize the currency system, At the same time,
however9 the Communists had no means of meeting their general
expenses except through the medium of banknotes,
2. Comment. The issuance of these currencies was necessary
because of the racial minority groups in those areas and because
prices in those areas were unstable.
ommexxt. The Yin Yuan (Silver Yuan) Notes here mentioned
an n s aragraphs e and f were probably the new issue of May 1949
which in some areas replaced the Chin Yuan (Gold Yuan) Notes issued
August 1948. This Yin Yuan is not to be confused with the Chinese
National Currency (CNC) which the Chin Yuan replaced.
25X1 . Comment. These rates show the sudden rise of value of Jon min
p iao and conversely, the decrease in value of Chin Yuan. Notes)9
and the shortened period for collections The difference in rates of
exchange for Yin Yuan Notes in Canton and Chungking resulted because
many of these notes were circulating in Canton, while a few existed
in Chungking.
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