Chinese Money in Global Context: Historic Junctures between 600 bce and 2012 by Niv Horesh (review)

Monetary history usually uses as a geographical framework national boundaries or studies phenomena like the “Price Revolution” that resulted from silver’s arrival in Spain in the sixteenth century or the Japanese adoption of the gold standard. Despite this seemingly narrow scope, all monetary historians know well that money moves to regions in which its purchasing power is higher, without consideration for territorial or national boundaries; this makes this particular commodity—money—extremely susceptible to global events. A good example is the Nixon Shock of 1971 that ended the post–Second World War Bretton Woods system. Such a decision came as the result of Vietnam War expenditures and a severe deficit in balance of payments—historically wars and devaluations go hand in hand. The gold standard vanished, and economic agents “acquiesced in the morphing of money into one of the abstractions of the nation-state itself ” (p. 3); such an abstraction (fiat money) was, arguably, a facilitating factor in the 2008 financial crisis.

Horesh points out that since the sixteenth century the Chinese sold certain items overseas (ceramics, tea, and silk) in return for specie, such as the famous Carolus III pieces of eight of long-lasting fame, in an “uncanny resonance” with today’s export of China’s manufactured goods, which is financed by U.S. Treasury bonds. Simultaneously in the modern era copper cash left China to acquire Southeast Asian tropical products in a fashion parallel to today’s use of the renminbi in exchanges with neighboring countries (p. 214). The aforementioned events studied in the book indicate that Horesh places global monetary history in a longue durée that begins with the spade-shaped coins (749–722 b.c.e.)—today prominent in the People’s Bank of China logo—and finishes covering current discussions on the future of the renminbi. This diachronic global perspective places “earlier junctures in Chinese monetary history” within the global use of fiat currency “in view of China’s resurgence in the twenty-first century” (p. 16). In the introduction, Horesh adopts New Institutional Economics for its intellectual perspective, given its theoretical emphasis on property rights—“the very engine of history”—in the “production, dissemination, and regulation of money” (p. 9). Accordingly he compares Roman and Central European medieval operations, in which ownership was guaranteed by the state, with imperial China’s weak protection for miners, which resulted in lower production of minerals and a lack of technological development in the long run.

The book is divided into two parts: Part 1 addresses the use of copper coinage in China, the origins and evolution of Chinese Western banknotes, and the role played by silver in initiating “the great Money Divergence.” Part 2 reviews the use of paper money under the Qing, including British banknotes issued in Shanghai, along with Japanese colonial banking and monetary reforms in China, Korea, and Taiwan; the text closes with a consideration of the possibility of the renminbi becoming a global currency.

Horesh postulates that as far back as the third century b.c.e., the diffusion of round coinage from Bactria to China in this early phase of “globalization,” “quite literally, still shapes our most fundamental grasp of money” (p. 39). These cast-bronze coins carry a significant symbolic message: The round borders represent “heaven” and the square holes, “earth,” suggesting a “mandate from heaven” to rule as well as showing the emperor’s exclusive right to issue coinage (p. 15). In China, copper cash was conceived as a “public good” provided by the imperial administration in order to facilitate the livelihood of common people (p. 91). Today the three large state-run commercial banks of China display this coin’s shape in their logos.

Linked to “China’s medieval economic revolution” during the Northern Song (960–1127) and Southern Song (1127–1279) dynasties, paper money began to circulate. The Yuan dynasty (1271–1368)—the...