China has a history of currency as long as 5000 years. Among the ancient Chinese characters, nearly all characters about value, money are related to “shell”.
We know that the first people used barter to exchange for possessions of value from others. They did not use money to buy goods from other people at the first beginning.
In 1,000 B.C., China produced mock cowry shells at the end of the Stone Age. With the fast development of commodity exchange, the demand of currency is increasing rapidly. There was a shortage of cowry shells on the market. There were not enough cowry shells, Chinese people began to make bronze shell at Shang Dynasty. Thus those cowry shells were thought of as the original development of metal currency.
After the ending of the Warring States Period, the Qin came to power in 221 B.C. Emperor Qin Shi Huang, also called the first emperor of China, promulgated the first currency regulation. From then on, China started to use the unified currency with regular shape, the classic rounded shape with cubic hole. This shaped currency lasted until the republic of China.
At the earlier stage, local government or states can make money as well. However from 115 B.C, emperor Wu at Han Dynasty issued new law that make the central government the only legal mint.
Since Qin and Han Dynasties, Chinese money (metal currency) would put its weight on to show its value. That’s to say value of metal money was based on its weight at those times. But this rule had many shortages or inconvenience, for example there could be shortage of bronze or silver, for big transactions, it could be a big trouble to carry large quantity coins.
In 621, Li Yuan changed the rule inherited from Qin and Han Dynasties, Tong Bao (also named Yuan Bao) was built.
At early China, the coin value was determined by both coin quality and quantity. At North Song Dynasty, there was a lack of copper, the government began to mint currency with iron. Iron was such heavy yet cheap that it was inconvenient to carry. Right at this time, paper currency was first printed at Sichuan province of China.
At late Qing Dynasty the Chinese government began to import mint machine from foreign country and make money with machine other than manual labor.
