China Exclusive: A brief history of "the people's money" of China

With a new, harder to counterfeit, 100-yuan banknote going into circulation on Thursday, two hand-made notes "issued" in 1960 and now part of the collection at Shenyang Financial Museum are back in the spotlight.

Such is the march of history that the two small pieces of paper, both considered forgeries fifty-odd years ago, are now seen as lovely (and valuable) "artworks" through the eyes of museum-goers.

In denominations of one and two yuan, the notes were drawn in colored pen. One depicts a female tractor driver, while the other, which is not quite finished, shows metal workers operating lathes. The forgeries were confiscated by Shenyang police who handed them over to the city's branch of the People's Bank of China before they ended up at the museum.

The China's currency, the yuan, is officially known as the renminbi (RMB), which means "the people's currency". The different names correspond reasonably well to Britain's "pound" and "sterling". Most ordinary people in day-to-day transactions refer to the currency as "kuai" which is roughly equivalent to Britain's "quid", or "buck" in the United States. The yuan has been lining Chinese people's pockets for 67 years since it was introduced in 1948.

Today the 100-yuan note, worth just less than 16 U.S. dollars, is the largest denomination, a policy intended to curb both counterfeiting and corruption. The central bank issued notes as large as 50,000 yuan in the first 1948 set, but with the effort, skill and costs of forging notes more or less the same regardless of denomination, smaller notes make more sense.

The first set of RMB was issued in 12 denominations and there were 62 different versions. The poorly-printed notes were easy to forge which greatly handicapped both credibility and circulation.

In 1952, due to its weak manufacturing base, China asked a trusted friend, the Soviet Union, to print its second set of RMB. In 1955, the new notes entered circulation after they were "imported" to northeast China's Manchuria by train, labeled as "technical equipment" sent by a timber company.

China made a meticulous hand-over plan for the big day: the train would be completely unloaded in one day; 10 people opened the 10 train carriages simultaneously; the pick-up cars were strictly waterproof; security guards were to be on watch at both ends of the carriages.

However, as the relationship between the two countries turned sour, the central bank in 1964 began to call in notes printed by the Soviet Union, including the one and only 3-yuan note in China's currency history.

Importing printers from the Soviet Union became impossible so China's printing experts had to rely on their own ingenuity. After many trials, a third set of RMB with watermarks came into use in the 1960s, ending outsourcing of China's currency printing.

The red 1-jiao (0.1 yuan) note in the new set was replaced by a green one just two years after it first appeared. According to legend among collectors, the problem with the note was that it showed some workers "walking to the right" in the illustration on the back. Political ideology was a very serious issue in China at the time, and such a "rightist deviation error" led the "evil" note to total destruction. It is now one of the rarest and most precious notes among Chinese notaphilists.

The yuan notes have not only brought fortune to collectors, but also made Ma Wenwei, a financial analyst at the central bank in 1950s, the most famous calligrapher in China. Ma was asked to write the Chinese characters for "People's Bank of China," "yuan," "jiao" and all the relevant numbers without being told why. His writing would eventually appear on the notes, but due to certain confidentiality requirements, he remained ignorant of the fact until the notes were issued. From 1999, Ma's calligraphy was circulated worldwide, as the fifth set of the notes carried the word "yuan" on their back for the first time, in an effort to internationalize the currency.

"Chinese people are always curious about their past, and how they've become the way they are," said Liu Lei with the Shenyang museum. Today's new 100-yuan note "will be harder to counterfeit," he said, "and the intellectual property rights of the security features are owned by ourselves." Endi