Social Sciences in China (Chinese Edition)

No.10, 2020

The Divergences of Evolutionary Path of the Systems of Currency Circulation between China and Japan from the 16th to the 19th Centuries

(Abstract)

Zhong Weimin and Qiu Yongzhi

Between the 16th and the 19th centuries, two important divergences occurred between China and Japan in the evolution of currency circulation. The first of these occurred from the mid-to late 16th century. Seen in the light of the administrative power to issue currency, in China this was represented by the “decentralization” of power with the increasing bottom-up “silverization” of currency metage, together with the shaky nature of the government’s power to issue currency and its weakened ability to manage and intervene in its core currency; In contrast, in Japan it was characterized by the “centralization” of power, as seen in the shogunate’s establishment of a government-led tri-metallic monetary system using gold, silver and copper. Japan thus had the ability to repeatedly recast coinage and regulate the currency circulation market. In the second half of the 19th century, the Chinese and Japanese establishment of modern monetary and financial systems was even more divergent. China’s monetary and financial system not only developed slowly, but was also in total disarray, and its monetary sovereignty was seriously eroded. Japan set up a modern monetary and financial system earlier and more smoothly, and thus established its national monetary sovereignty. This not only affected the historical destiny of the two countries, but also highlighted the deep-seated influence of the traditional features of national financial capacity on the construction of the modern financial system, reflecting the strong impact of the path dependence of China’s historical heritage on institutional change.