In this section, we will examine how ancient Chinese monetary traditions differ from Western ones, focusing on the concept of "sign currency." The information presented is based on the book "Aux origines de la monnaie."

According to the author, sign currency is the historical equivalent of today's fiat currency: a medium of exchange whose value is not derived from its intrinsic material content but from a social consensus.

Ancient Chinese coinage differs from Western traditions. It was primarily metallic, but cast rather than minted, and did not bear the effigy of a sovereign. Notably, the Chinese state did not hold a monopoly on monetary issuance. This can be explained by the absence of an economic need to do so, given the state's abundant tax revenue from a large taxable population.

Chinese currency is also characterized by its fiduciary nature. Initially, bronze imitations of cowries (sea shells) were used as currency, with their value exceeding the intrinsic value of the metal. When shells became scarce, these bronze replicas retained the value of the original item.

Therefore, Chinese currency was not based on the material's value or the rarity of the original item (e.g., the seeshell), but on collective confidence in its function as a medium of exchange—a monetary sign.

The cowrie was widely used as an early form of currency. As early as the Shang and Zhou dynasties (the first dynasties of the first and second millennia BC), cowrie shells were used not only to reward military deeds, but also to pay for labor, serve as a unit of account, and purchase land.

Archaeological evidence confirms these uses, though it is unclear if cowries were used for everyday transactions like buying food.

Over time, the scarcity of genuine cowrie shells led to the production of imitations in bronze, bone, mother-of-pearl or stone, often for funerary purposes to preserve real wealth. This shift in medium is also linked to the state's control over the monetary supply, as creating currency is a direct assertion of authority.

By overcoming the natural scarcity of seeshells, the ability to produce currency granted the state significant influence over economic management.

Unlike Mesopotamia, where currency was tied to the weight of precious metal, Chinese coinage terminology derives directly from the initial shapes of the objects used as currency: cowries (bei), knives (dao), spades (bu), and round coins (quan or qian). This etymological divergence highlights a fundamental difference in the conceptual foundations of money in China versus the West.

In China, monetary value was largely fiduciary, based on a social convention among the State, producers, and merchants.

The Chinese state used money as an instrument of economic regulation: in times of monetary abundance, the value of money decreased, making it easier for people to buy goods. Conversely, in times of monetary scarcity, the value of money increased, reinforcing the state's purchasing power for its subsequent operations.

A link can be made here with inflation and deflation. With a fixed money supply, if the economy's productivity increases, the value of money rises. Conversely, if productivity falls, the value of money decreases. In this example, however, the opposite is true. Probably because the prince did not have a complete monopoly on the production of money, yet it still indicates that the value of money was linked to economic conditions.

The philosopher Mo Di (5th-4th century BC) had already analyzed this relationship between price and value: according to him, price variations do not reflect a real notion of cheapness or absolute dearness, but rather a fluctuating relationship between goods and money, independently of the stable nominal value of the currency sign.

So here, instead of saying that the gold coin would have some kind of basic value as such, such as use value or intrinsic value, he points out that the value of the monetary sign came rather from the state of the economy.

In China, coins did not necessarily need to be officially marked or guaranteed. Their acceptance depended solely on collective trust, which explains why bronze or copper coins without specific inscriptions were able to circulate freely for a long time.

The one on the image above is a Chinese coin from the Middle Ages. It is a cast coin featuring a square hole in the center. This hole was used to thread a rope through, allowing the coins to be strung together to create bracelets or necklaces. However, these were not primarily for wearing; they were mainly used for accounting purposes. They could be strung together to form units of account in the form of large strings, with the pieces interlocked. There weren't necessarily any specific marks, sometimes they were simply bronze circles.

The state's monetary monopoly, belatedly established by Wudi of the Han Dynasty in 113 BC, was often challenged, allowing various private or local players to issue their own currencies, provided they enjoyed sufficient social trust.

The low intrinsic value of Chinese currencies prevented hoarding, guaranteeing their smooth circulation. Precious metals were seldom used as circulating currency to prevent hoarding. Gold, being too expensive, was typically set aside rather than spent. Instead, silk was the primary high-value currency in Chinese international trade.

During economic or monetary crises, particularly when the price of copper was rising, innovative solutions were adopted: thus, as early as the 2nd century AD, coins in circulation were cut to create smaller units, enabling fluid circulation to be maintained at lower cost. Other eras, such as that of Wang Mang (early 1st century AD), experimented with highly fiduciary currencies, where face values were far higher than their actual metal content, thus prefiguring banknotes. They took a coin and stamped values like 50, 100, or 200 on it to indicate larger amounts, such as 200 coins. This practice likely contributed to significant inflation.

As mentioned above, this system was based on a social convention between the State, producers, and merchants, but also on authoritarian and severe rules for those who did not play the game, notably in relation to the choice of pieces (whether beautiful or not) or the length of fabrics (not in line with the standard).

This system was inherently unstable, relying primarily on strict rules that compelled officials and traders to accept damaged coins under threat of sanction.

China was also a pioneer in the issuance of early forms of paper money, initially adopted in response to a shortage of metal in the 9th century AD. Despite their initial advantages, these paper currencies regularly led to inflationary spirals when issued in excess, as witnessed in the Song or Ming periods, when excessive issuance led to serious currency crises, illustrated by Marco Polo in the 13th century, who even noted that the falsification of such paper money was punishable by death. This highlights the coercive enforcement underlying the system.

Thus, the Chinese experience is characterized by a profoundly fiduciary conception of money, remarkable flexibility of the monetary system, and early use of paper currencies, based on trust between economic players rather than on the intrinsic value of the media used.