Hyperinflation Museum

China 1947-1949 Hyperinflation: The Fabi, the Gold Yuan and the Collapse

Between October 1947 and mid-May 1949, Nationalist China lived through the seventh-most severe hyperinflation in the Hanke-Krus World Hyperinflation Table (Cato Institute), peaking in April 1949 at 5,070 percent per month, a rate that doubled Shanghai wholesale prices every 5.34 days. The old fabi was swapped for a brand new gold yuan on 19 August 1948, and within nine months the Central Bank of China was printing single notes of 5,000,000 gold yuan.

Oct 1947 to mid-May 1949 April 1949 5,070% monthly Prices doubled every 5.34 days

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Last updated: July 2026

What was China's 1947 to 1949 hyperinflation?

It was the terminal currency collapse of the Nationalist government during the Chinese Civil War, dated by Hanke and Krus from October 1947 to mid-May 1949, with a peak monthly inflation rate of 5,070 percent in April 1949 measured against Shanghai wholesale prices (Hanke-Krus World Hyperinflation Table, Cato Institute).

China is unusual in the hyperinflation record because it appears twice. The Hanke-Krus table lists an earlier Chinese episode from July 1943 to August 1945, peaking at 302 percent per month in June 1945, also on Shanghai wholesale prices. That wartime inflation was severe but survivable. The second episode, the one collectors mean when they say Chinese hyperinflation, was an order of magnitude worse and ended with the currency abandoned altogether.

Both share a cause. A government fighting a war it could not fund from taxation covered the gap by issuing notes. During the war against Japan, occupation authorities also flooded parts of the country with their own paper, a story told separately in our page on Japanese invasion money. When the Second World War ended, the Nationalist government inherited a shattered tax base, a fractured monetary system and, almost immediately, a civil war. The presses stayed on.

One detail matters before you compare figures elsewhere. Hanke and Krus flag the Chinese peak with a footnote stating that their rate differs from an earlier published figure by one of the authors, and that the revision rests on new data obtained from the Library of Congress in Washington, D.C. If you find a different Chinese peak in older literature, this is usually why. For the full ordering of cataloged episodes, see every hyperinflation ranked.

Why did the fabi collapse?

The fabi was China's fiat currency from the 1935 reform onward, and it collapsed because note circulation was expanded to fund war spending, rising from roughly 30 trillion yuan at the start of 1948 to roughly 700 trillion by August 1948 (Foreign Relations of the United States, 1948, Volume VIII).

The fabi, meaning legal tender note, was created in the currency reform of 1935. Before it, China was effectively on a silver standard, which left the domestic price level hostage to the world silver market. When American silver purchases pushed world prices up, silver drained out of China and the economy contracted. The 1935 reform cut that link by making paper the legal tender and nationalizing silver into the banking system. Three government-controlled institutions were authorized to issue the new notes, the Central Bank of China, the Bank of China and the Bank of Communications, with the Farmers Bank of China added later. From 1942, issue was consolidated in the Central Bank of China alone.

For a few years the reform worked. Then came eight years of war with Japan, followed without pause by civil war. By 1948 the arithmetic had become impossible. A note issue standing at about 30 trillion yuan at the beginning of 1948 had grown to about 700 trillion by August, a more than twentyfold expansion in eight months (Foreign Relations of the United States, 1948, Volume VIII). This is the same dynamic that destroyed the papiermark in Germany in 1923, compressed into less time and running against an active war for control of the country. By that August the fabi had lost its purchasing power to the point where the government concluded no adjustment could save it. The answer was to start again with a new unit.

What did the gold yuan reform of 19 August 1948 actually do?

On 19 August 1948 the Nationalist government replaced the fabi with the gold yuan certificate at 3,000,000 fabi to one gold yuan, pegged it at four gold yuan to the US dollar, capped the total issue at two billion units, and required residents to surrender privately held gold, silver and foreign currency (Foreign Relations of the United States, 1948, Volume VIII, telegram from the Consul General at Shanghai).

The terms were announced with unusual precision, which is why the reform is so well documented in the American diplomatic record. Contemporary US State Department reporting from Shanghai captured the full schedule of rates and the declared reserve backing.

Source: Foreign Relations of the United States, 1948, Volume VIII (US Department of State, Office of the Historian).

The reform came with a package of emergency measures: a two-day bank holiday, compulsory surrender of privately held bullion and foreign currency in exchange for the new notes, discontinuation of official cost-of-living indexes, and a prohibition on strikes. Against the authorized two billion gold yuan, worth US$500 million at the official rate of four to one, the declared holding of gold, silver and foreign exchange of about US$200 million amounted to roughly 40 percent coverage. American diplomatic reporting from the same weeks added that the Central Bank "has outstanding foreign exchange liabilities amounting to more than half of these reserves" (Foreign Relations of the United States, 1948, Volume VIII, Document 342).

The ceiling did not hold, and that single fact is the whole story of the gold yuan. Households and businesses that complied with the surrender order had traded real metal for paper on the promise of a fixed issue. When the limit was abandoned, the loss fell on exactly the people who had followed the rules. Confidence broken that way does not return.

How large did the gold yuan notes get?

The gold yuan opened in August 1948 with a top note of 100 units (Foreign Relations of the United States, 1948, Volume VIII) and reached 5,000,000 units by late May 1949, while the Sinkiang Provincial Bank issued a note of 6,000,000,000 provincial yuan in the same year (Chinese gold yuan, Wikipedia).

Denomination escalation is the most legible fingerprint of a hyperinflation. You do not need the price index, because the notes themselves record it. The published gold yuan issue chronology (Chinese gold yuan, Wikipedia) gives the progression below, and surviving 5,000,000 gold yuan notes of the Central Bank of China show where it ended.

Initial August 1948 series confirmed by Foreign Relations of the United States, 1948, Volume VIII, Document 333. Later escalation from the published gold yuan issue chronology (Chinese gold yuan, Wikipedia), which records 500,000 and 1,000,000 gold yuan notes issued in May 1949 and states that the 5,000,000 gold yuan note was issued with limited circulation as Shanghai was occupied. Pick catalog numbers are omitted here because we could not corroborate them against a published reference we can cite, not because none exists.

The 5,000,000 gold yuan of 1949 is the largest denomination the Central Bank of China itself issued, and the published issue chronology puts it at the very end of the run, printed as Shanghai was occupied and circulating only briefly (Chinese gold yuan, Wikipedia). If Pick catalog references are new to you, our guide to Pick catalog numbers explains how the numbering works and why a careful listing leaves a number blank rather than guess at it.

The far larger number belongs to Sinkiang, the vast northwestern province now written as Xinjiang. Its provincial bank ran a separate local unit that had already inflated hard on its own account, and in 1949 it issued a note of 6,000,000,000 yuan (Chinese gold yuan, Wikipedia). It carries the largest face value we have found documented on any Chinese banknote. The PMG Population Report records only two examples in uncirculated condition, which tells you how few survived a note that was spent rather than saved. It is not the world record, however. That belongs to Hungary, covered in our page on the highest denomination banknote ever and in the story of the Hungarian pengo collapse.

Where does China rank among history's hyperinflations?

China's 1947 to 1949 episode is the seventh entry in the Hanke-Krus World Hyperinflation Table, with a peak of 5,070 percent per month, placing it below Germany's 29,500 percent and Greece's 13,800 percent but above every episode outside the top six.

The table below reproduces selected rows exactly as published, keeping the authors' own numbering so you can see where the Chinese episodes sit in the full list.

Source: Steve H. Hanke and Nicholas Krus, "World Hyperinflations," Cato Working Paper no. 8, Cato Institute, 15 August 2012. Chinese figures use Shanghai wholesale prices. Ranks are the table's own numbering; rows 4, 8 to 10, 12 to 14 and 16 to 37 are omitted here for readability.

Two things stand out. First, the daily column makes the abstract numbers physical. At 14.1 percent per day, a wage negotiated on Monday had lost roughly half its purchasing power by Saturday. Workers in Shanghai were paid more frequently and spent immediately, because holding cash overnight was a measurable loss.

Second, look at the Taiwan row at rank 38. The island ran its own currency, the Taipi, which entered hyperinflation in October 1948, two months after the gold yuan reform on the mainland, and ended in May 1949 at almost exactly the same moment the mainland episode did. The two collapses were connected, and that connection is why Taiwan introduced the New Taiwan dollar in June 1949. Compare the Chinese figures against Zimbabwe and Greece to see how differently these episodes ended.

What replaced the gold yuan in July 1949?

The gold yuan was withdrawn on 3 July 1949, one day after the Nationalist government issued silver yuan notes on 2 July 1949 under Finance Minister Xu Kan, backed by silver dollars struck at the Central Mint of China (Journal of East Asian Numismatics).

The silver yuan attempted the opposite of the gold yuan. Rather than promise a fixed issue of paper, the government promised metal and made the paper convertible into it. Seven types of silver dollar were authorized for exchange, including Sun Yat-sen dollars, Yuan Shih-kai dollars, dragon dollars and Mexican dollars, with the standard coin specified at 26.6971 grams of .88 fineness containing 23.493448 grams of pure silver (Journal of East Asian Numismatics).

It arrived far too late. By July 1949 the Nationalist government had already lost most of the mainland, and the silver yuan circulated in shrinking territory for less than half a year, ending when the government lost its last mainland stronghold at the close of 1949. The People's Bank of China renminbi took over on the mainland, and the New Taiwan dollar replaced the Taipi from June 1949.

The gold yuan to silver yuan conversion rate is one figure we have deliberately left off this page. Published sources disagree, and we would rather leave a gap than print a number we cannot stand behind.

What do collectors find from this period today?

Chinese gold yuan notes from 1948 and 1949 survive in large numbers at the lower denominations and become progressively harder to find as the figures climb, with the 5,000,000 gold yuan and the Sinkiang high denominations sitting at the far scarce end of the range.

The everyday gold yuan denominations are among the most accessible hyperinflation notes in world paper money. They were printed in enormous quantity in a short window, many were never spent once the currency ceased to circulate, and remainders reached the collector market intact. A well-preserved gold yuan note dated 1948 or 1949 is an artifact of one of the seven worst monetary collapses ever measured (Hanke-Krus World Hyperinflation Table, Cato Institute). Availability and pricing vary with what is in stock, so browse Chinese banknotes or the assembled hyperinflation sets.

Three practical points. First, condition matters more than usual, because these notes circulated in a country at war and clean uncirculated examples of the mid and high denominations are genuinely uncommon. Our banknote grading guide covers how to read a grade, and graded versus raw banknotes explains when certification is worth paying for.

Second, this is a heavily reproduced series. The Sinkiang 6,000,000,000 yuan is a favorite subject for modern novelty reprints, sold openly as souvenirs and then quietly resold as genuine further down the line. The tells are usually in the paper and the printing method rather than the design, and our page on how to spot counterfeit banknotes walks through what to check.

Third, store them properly. Chinese notes of this era were printed on thin, often brittle wartime paper that reacts badly to humidity and light. See how to store banknotes and how to collect world banknotes.

What else do collectors ask about China's hyperinflation?

Planet Banknote is a family-owned dealership in Sarasota, Florida, founded in 2021. Every note is sourced direct from mints, central banks, and authorized distributors, inspected through our Planet Banknote Verified process, and ships with a free Certificate of Authenticity. US orders ship free via USPS Priority, and every order includes a free bonus gift.

Keep reading: see how China compares in every hyperinflation ranked, follow the denomination record to its limit in the highest denomination banknote ever issued, read the parallel wartime story in Japanese invasion money, or compare the German collapse in Germany 1923. When you are ready to hold one, browse Chinese banknotes or the certified selection in graded banknotes.