Historical Sketch

In 1931, Japan invaded Manchuria and established a nominally independent state headed by the former Chinese emperor, but under direct Japanese control. In the mid-1930s, gradually further Chinese territories were conquered and put under the "authority" of puppet governments:
- 1936-1938: Inner Mongolian Federation (Chaha'er, Suiyuan, North Shānxi)
- 1935-1937: "Autonomous Anti-Comintern Government" of East Hebei
- 1937-1938: Taoist City Government of Shanghai
- 1937-1938: "Provisional" Government of China (West Hebei, Shandong, South Shānxi, He'nan, North Jiangsu)
- 1937-1938: "Reformed" Government of China (South Jiangsu, Zhejiang, Anhui, Nanjing City).
In 1938, the territories were consolidated into two areas, as Inner Mongolia and East Hebei were placed under the "Provisional Government" and Shanghai under the "Reformed Government". Two years later, in 1940, also this split was abolished, and all occupied territories came under the "Reorganized National" Government of China.

Monetary History Overview

The gradual Japanese advance is reflected in the currency development. In the territories of the puppet governments local banks were founded and began issuing money. The currency areas remained distinct also after all occupied China had been place under a single government. As a consequence, beside Manchuria, there were three separate monetary systems in occupied China. The discipline of the issuing banks was different such that during time, the four occupation currencies on Chinese soil were valued at different rates. They maintained fixed rates against the Japanese Yen until early 1945. With the changing war the occupation government started financing expenditure via the printing press, in the same way as in unoccupied China, such that all currencies on Chinese soil experienced a similar inflationary devaluation. After the Japanese defeat the nationalist Chinese government quickly demonetized the occupation currencies and exchanged them at unfavourable rates. The result was another inflationary price surge as the population tried to spend the occupation moneys rather than having them exchanged.

The Meng-Chiang Yuan was created in 1937, initially issued by two local banks which consolidated into the Bank of Inner Mongolia (Meng-Chiang, Méngjiāng) a year after. The Yuan was at par with the Japanese Yen and, like its Manchurian counterpart, remained relatively stable. After the Japanese defeat in August 1945, the Central Bank of China took over from the liquidated Meng-Chiang Bank and organized a currency changeover. In October 1945, the Chinese Dollar got introduced, and occupation banknotes were demonetized until end of the year.

The Japanese-Chinese (Northern) Yuan was created in 1937 for the short-lived "East Hopei Anti-Comintern Autonomous Government". In 1938, the local East Hopei (Chi-Tung, Jìdōng) Bank was succeeded by the Beijing-based Federal Reserve Bank of China. The northern occupation currency circulated in the Japanese controlled territories north of the Yangzi river. It was at par with the Japanese Yen and remained relatively stable. After the Japanese defeat in August 1945, the Central Bank of China took over from the liquidated Federal Reserve Bank and organized a currency changeover. In November 1945, the Chinese Dollar got introduced, and the occupation banknotes were demonetized within short time.

The Japanese-Chinese (Southern) Yuan was created in 1939 by the Shanghai-based Hua-Hsing (Huáxīng) Commercial Bank, which in 1941 got replaced by the Central Reserve Bank of China in Nanjing. The northern occupation currency circulated in the Japanese controlled territories north of the Yangzi river. With the changeover of the issuing bank in 1941, the currency repegged from the Pound Sterling to the Japanese Yen. Unlike the other occupation currencies, the southern currency was not at par with the Yen but equal to a quarter, and even depreciated further in the subsequent years. After the Japanese defeat in August 1945, the Central Bank of China took over from the liquidated Central Reserve Bank and organized a currency changeover. In November 1945, the Chinese Dollar got introduced, and the occupation banknotes were demonetized within short time.

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