“Empire of Silver: A New Monetary History of China” by Jin Xu

Mexican silver dollar with Chinese chops (via Wikimedia Commons) Mexican silver dollar with Chinese chops (via Wikimedia Commons)

It is not unusual for journalists from leading publications to turn their hand to books, but it is less usual for such books to have started off in Chinese. Jin Xu is senior editor and chief financial commentator at the Financial Times Chinese and her 2017 monetary history of China, Empire of Silver, has just been released in English in a translation from the well-regarded Stacy Mosher.

This is no paean to China’s past glories and the “silver” in Xu’s title is not meant as a complement. Xu is looking to explain what she calls on several occasions China’s “backwardness” and while she may not lay China’s millennium-long history of monetary mishaps culminating in the disastrous delay in implementing a modern monetary system entirely at silver’s door, silver was always “a continuous but concealed thread”.


Do silver and backwardness have an accidental and coincidental or a causal relationship? Was silver a root cause of China’s backwardness? Sorting through the centuries-long history of silver, we see that the fate of silver accompanies an ancient empire’s struggles and entanglements, and that behind silver’s metamorphosis is not only dynastic change but the rise and fall of civilizations. Fastening our gaze on silver gives us a glimpse of China’s path to modernization.


Whether or not one is convinced that Xu always has cause and effect the right way around (history being complicated), Empire of Silver provides welcome clarity on China’s monetary development which was, she points out, usually on a very different trajectory that that of the West. It doesn’t hurt that the subject itself is fascinating and that Xu’s enthusiasm for it is infectious.

The Ming Dynasty finally gave up on paper money to standardize on silver.

 Empire of Silver: A New Monetary History of China, Jin Xu, Stacy Mosher (trans) (Yale University Press, February 2021)
Empire of Silver: A New Monetary History of China, Jin Xu, Stacy Mosher (trans) (Yale University Press, February 2021)

It’s not, as in many other things, that China didn’t get there first. Paper money, unlike the other inventions for which China is famous—from silk to gunpowder—is a social innovation, more like the Greek invention of democracy or the invention in what is now Italy of what became modern banking. Xu recounts a number of good practices, such as expiration dates at which time the old notes were replaced with new ones, and shows the Chinese inching toward monetary theory as early as the Song Dynasty as they tried to keep metal and paper currency in balance. But paper money, which could be denominated in silver, copper cash or even silk and could nominally be exchanged for the underlying commodity, ended up being over-issued and in practice often traded for below face value, sometimes so much below that it became in effect worthless. This happened several times over the centuries, and the Ming Dynasty finally gave up on paper money to standardize on silver.

What China didn’t have that the West had had for millennia was “coinage”. For some reason, the Chinese never minted precious metal coins until the last years of the Qing Dynasty. Copper (or, in some times and places, iron) cash, which look like coins, had so little value that the practical unit was the “string”. Silver was always metallic. Measured in taels, even that wasn’t standardized; taels came in multiple weights and purities. Transactions including weighing and assaying. A “virtual tael”—actually multiple—was created to aid in accounting. The exchange rate between silver and copper was variable; attempts to fix exchange rates led to one pushing out the other. By the early 20th century:


China used not only a mixture of silver taels and various kinds of silver dollars, but also copper cash and foreign currency, as well as paper currency issued by foreign banks and “private notes” from small private banks. Silver taels included both virtual silver (xuyin) and physical silver (shiyin), and physical silver included baoyin (silver ingots, yuanbao), zhongding (medium-sized ingots), luozi (ovule ingots), xiaoluo, fragmentary silver, and so on. Silver ingots were also subdivided according to their silver content in various regions, such as Shanghai’s “2-7 baoyin” and Tianjin’s “white silver.” There were reportedly more than 100 types of scales for weighing physical silver during the Beiyang era. Virtual silver also existed in every form and description, including treasury silver, customs silver, and tribute silver.


China didn’t even settle on a currency until the 1930s when the tael was finally replaced with the silver dollar.

China had in effect outsourced its money supply.

Ming currency reforms required, among other things, that all taxes be paid in silver, rather than in kind. Silver, in short order, became China’s money supply, but China had little silver of its own. Supplies originally came from Japan, but were replaced in the late 16th century by silver pouring out of Spanish America, either directly via the Manila Galleon, or indirectly via Europe. Although trade was the vehicle, much was in fact currency arbitrage: the silver to gold exchange rate in Europe was several times higher than in China.

China had in effect outsourced its money supply. By the 18th century, China had also outsourced its currency, as milled (and hence standardized) Spanish reals and later Mexican “eagle dollars” became the form of choice. It was this Spanish/Mexican coin that became the yuan (as well as, more a century early, the US dollar). The inflows of silver made possible the tremendous growth in the Chinese economy in this period, accompanied by tremendous population growth; Xu notes that per capita income hardly budged.

Xu refers to this situation as a lack of “monetary sovereignty”: once the Chinese economy depended on inflows of silver, it was subject to financial and other developments overseas. A contraction in silver supply a few decades into the 17th century meant a lack of specie to pay the taxes denominated in it. The Ming Dynasty fell soon after.

The economy was prone to deflation whenever the money supply contracted. Xu goes so far as to call the “Opium Wars”, the “Silver Wars”. Whatever social problems were caused by opium, Xu finds the economic problems caused by the outflow of silver to be far worse.

The part of the book that deals with the mid-19th on and covers global adoption of the gold standard, bimetallism (a country with coinages in two metals) and China’s adoption of and adherence to the silver standard might benefit by being read in conjunction with William L Silber’s The Story of Silver which recounts the same history from the US end. The price of silver plummeted through the first part of the 20th century leading to both an export boom in China (its currency being de facto devalued) as well as inflation. When, to accommodate US mining interests during the Great Depression, American President Franklin Delano Roosevelt yanked up the silver price, silver began to flow out of China notwithstanding the Government’s attempt to control and prohibit it. The result was deflation and capital flight, greatly weakening China just as it was being threatened by Japan. A parallel thread is China’s lack of a banking system until the Republican period.

Empire of Silver is, title notwithstanding, about much more than silver.

Xu is clearly well-read in Western works, perhaps a bit too well-read, for the Bible and The Merchant of Venice both make not entirely relevant appearances. Indeed, the book could have done with an edit: it repeats itself and includes immaterial asides such as the Spanish reportedly introducing the smallpox vaccine to China or that HSBC was founded the same year as the signing of Treaty of Appomattox. This is a translation of course, the fluency of which greatly aids in readability, but a little less faithfulness to what one supposes was the original might have resulted in a better book.

Empire of Silver is, title notwithstanding, about much more than silver: it is an attempt to “view history through the perspective of money” and, more specifically, “to provide a monetary history of China with a global perspective.” In the process, Xu covers paper money, cash and the relationship between them, government finance and taxation and the rise of banking. She makes constant reference to developments in the West, which provide not just context, but also both comparison and contrast. Since silver was, at least by the late 16th century, a global commodity and the vehicle through which the global economy began to take shape, Empire of Silver provides a much needed complement to other books which tell the story from the other side.

Peter Gordon is editor of the Asian Review of Books and co-author of The Silver Way: China, Spanish America and the Birth of Globalisation, 1565-1815.