| There was an important reform of the RMB exchange rate system in 2005 July, which uses the floating exchange rates system that was market-based and a so-called managed float against a basket of currencies.Reviewing the exchange rate movement after the reform, it is on an unilaterally upward trend on the whole, which brought about a series of researches concerning the exchange rate system. However, no matter it is in economic history or finance history, the researches concerning modern China exchange rate are rather scare, let alone the related researches that scholars focus on the modern China exchange rate system. Actually,there are not only exchange rate issues in modern China, but only more problems arise because of the exchange rate floating and fixed exchange rates. History doesn’t repeat itself,but there are remarkably alike. Studying the exchange rate systems appeared in modern China,in terms of the operation, change and influence to sum up experiences, will give great contributions to the improvement of the construction of RMB exchange rate system.This paper tries to give a systematic combining of the Chinese exchange rate system process and the economic performance under different exchange rate systems, and the time ranges from 1840 to 1938.Putting 1935 November as the boundary, the previous period is floating exchange rate system, then the period is fixed exchange rate system. On the one hand,the paper hope to use its researches to restore the natural appearance of the development history of the exchange rate system in modern China, filling the gap in academic research and organizing the collection of modern Chinese historical datas to proofread and unify datas. On the other hand, we hope to learn from history, summarizing the existing problems of the exchange rate system in modern China. Just at the time after ten years exchange rate reform,the paper hope these researchs can provide some enlightenments to the contemporary construction of RMB exchange rate system.This paper mainly goes along with time, combining the change characteristic of China’s exchange rate and different exchange systems, including four areas:On the first place, it analyzed the domestic and international backgrounds of the beginning of the exchange rate system in modern China. On the one hand, it discussed the domestic backgrounds. In the aspect of social background, Chinese social nature had changed because of the western impact after 1840.It transformed from a self-sufficient, independent feudal society which pursued closed-door policy to a semi-colonial and semi-feudal society forced to open. At the same time, internal contradictions leaded to regime change and socialinstability in modern China. In the aspect of the background of finance and financial institutions, after 1840, China was forced to sign a series of treaties, which made it face enormous financial pressure which had the concentrated outbreak in 1894. China was forced to ask for massive foreign debts because of fiscal deficit. The influx of foreign banks towards China conducted with capital input by the powerful countries. China’ own central bank did not appear until 1928. It became Chinese exchange controller in 1935 prior to the appearance of fixed exchange rate system, which acted by foreign banks led by HSBC before. In the aspect of domestic monetary background, currency system in modern China was one of the most fluctuant currency systems in the international currency at the same time, whose direct reason was China had no right to cast a single currency and the basic reason was a reflect on the economic field which the former regime had difficulties to realize independent unity politically when they faced the aggression internally and externally. On the other hand, it analyzed the international background. There were main international economic backgrounds.Britain, Belgium and some other countries had already finished industrial revolution prior to1840. Europe, the United States and the other powerful countries were experiencing the conversion from the agricultural country to the industrial country brought by industrial revolution. Industrialization urged powers to look for commodity output markets in the world.The conversion of industrialization drove monetary system of each country to experience the transformation from gold and silver bimetallism to gold standard, then to credit cash monetary system. Each nations conducted a spontaneous fixed exchange rate system during the period of gold standard which released gradually after the Great Depression in 1929.Secondly, It analyzed the beginning of the floating exchange rate system in modern China and the operation effect of the silver`s exchange rate falling period of floating exchange rate in China(1840-1931).First of all, prove the beginning of floating exchange rate system in modern China.In forty years after the Opium War In 1840,there had no focus on exchange rate issues in China. Though China’s first foreign currency-dominated debt came out(called the debt of YILI in Xinjiang province),which made the exchange rate issues under attention should be started in the forth borrowing of 1877.As the increase of the foreign currency-dominated debts after the sino-Japanese War and China began to surplus after 1888,which made it the beginning of entering into the floating exchange rate system.Shanghai,which was opened out in 1843,gradually became the most important foreign exchange market, and foreign banks led by HSBC controlled Shanghai even China`s foreign exchange trading. Inthe period of floating exchange rate system, the decision in foreign currency of China based on the ratio between gold and silver in London and Newyork markets.Shanghai Guiyuan and China custom were decided by the ratio between gold and silver, used the currency rate which was mainly used in England and America, the involved phase change characteristics before1931,presenting a tendency of falling down as a whole.Then, it analyzed the causes of Chinese foreign exchange rate volatility before 1931, which including the change of world’s gold and silver outputs, the evolution of world monetary system, the limitation for imports and exports of gold and silver in every countrys, the depression of world trade, the currency manipulation which operated by HSBC. These analyses indicate that foreign powers were both the basis of foreign exchange and the influencing factors of exchange rate fluctuation in China. At last, it discussed the effects of floating exchange rate system in China before1931.On the financial front, the floating exchange system impacted the national finance which resulted in the less of pound intensification; while it also prompted China to put tariff autonomy into practice.On the foreign trade front, the prominent features of foreign trade in modern China were trade deficit as a whole, while individual years were trade surplus and low per capital trade value; China mainly imported direct consumptive materials and exported raw materials; the main trade partners were powerful nations such as America, Japan, Britain and German, etc. This article disposed the influences of exchange rate in modern China by quantitative analysis. The nominal exchange rate of silver and actual price of silver which removed the effects of price, showed that the silver foreign exchange rate had not improved the situation of trade deficit, but it promoted export in China indeed.Before 1931, Chinese foreign currency exchange rate changed favorable impacts on China trade were: to promote the overseas export of new products; partially offset by the adverse effect of tariffs on trade;in Modern China NBTT adverse circumstances, silver foreign currency exchange rate improved China’s income terms of trade; encouraged enterprises to improve the ability to avoid foreign exchange risks. But there were also denominated in foreign currencies and export value decreased, increased the cost of imported equipment, which was not conducive to the adverse effects of the national industrial development. Third, the analysis of the flow of silver, in theory, the silver exchange rate was the comparative indicators of the price between China and foreign countrys, in fact,the difference of the actual silver purchasing power between China and foreign countrys caused silver flowing. Fourth, the analysis of the price front, the Chinese prices made a overall upward trend before 1931, the exchange rate becamean comparative indicators which international silver prices affected the Chinese price, which adversely affected the residents of the microscopic field. Fifth, the analysis of economic stability, floating exchange rate system in modern China triggered 1920-1921 outbreak of Shanghai "nine shillings a wave."Thirdly,the paper studied the operation and impacts of the floating exchange rate system in Chinese silver’s rising exchange rate(1931-1935,11).During this period,China still belonged to the stage of floating exchange rate system.Initiate the performance of the floating exchange rate system of China was different against the performances before 1931.First of all,through the analysis of the Chinese bid, silver price in the world, China’s foreign exchange rate.The changes of the China’s floating exchange rate system were concluded. Such as:China silver currency relative to the gold-standrad country’s currency rate appeared to be slipping. But compared with most countries which abandoned the gold-standard currency,China silver currency foreign currency began to rise.China silver currency against the yen rose faster than the rise in the dollar and sterling.China’s foreign exchange rate was influenced by the foreign silver smaller and smaller.There had been The nominal exchange rate and real exchange rate, and both were inconsistent.Secondly, there were two stages combed the causes of China’s exchange rate fluctuations.first(1931.9-1933.7),China silver`s foreign exchange rate was rise because other countrys abandoned the gold-standard,However because of the decline of international silver price.Made China silver`s foreign exchange rate rose inconsistent with national currencies depreciation.Secondly(1933.7-1935.11), American silver purchase policy made the world price increasing in silver,along with the influence of national currencies,prompted China silver`s foreign exchange rate had a rapidly rising power,but China implemented the foreign exchange control in 1934, eventually made silver`s foreign exchange rate rose more slowly than the rising speed of foreign silver price.During this period,China’s foreign exchange rate and its influencing factors were mainly foreign powers.Finally, this paper discussed the influences of the floating exchange rate system of China during this period.One is the analysis of financial, at this stage China enjoyed the reduction advantage of the principal and its interests of the foreign debts, but the amounts were limited.Because of China’s old loans partially obscured by the pledge of customs revenue and could not benefit from the reduction of the principals and its interests;New debts between 1931 and 1935 were less.The second is to analyze trade, this stage China’s foreign trade had two outstanding new changes:Shrink, foreign trade deficit, trade value per capitaldecline further;not only the net batter terms of trade, but also the income terms of trade deteriorated.Quantitative analysis found that 1931 to 1935, China’s foreign exchange rate and import and export volumes had not shown the rose of the foreign exchange rate, or the effect of promote the import and export.But exchange rate still had a certain role in the import and export.Third, the analysis of silver flows, Chinese silver overall surplus liquidity and the silver flow was the opposite direction compared with 1931 before. In addition to open the flow of silver, but also appeared to Japan-based silver smuggling in the north and Hongkong,the United States was the main destination of silver outflow. Differences in the purchasing power of foreign silver and domestic silver was the main cause of silver flows, foreign exchange rates became relatively standard of silver purchasing power.Fourth, the analysis of economic stability, the rise of silver`s foreign exchange rates caused Chinese price deflation and economic crisis, resulting in a significant impact on industry and agriculture. For businesses: made business conditions deteriorating of China Business; high exchange rate destroyed the trade competitiveness. For agriculture: silver`s high exchange rate led to an increase in imports of agricultural products;international silver price increasing led to rural silver flowing out of China after Shanghai, and made the vast rural areas appeared depression.The fourth, the paper analyzed the appearance, operation and the effect of the fixed exchange rate in modern China(1935.11-1938).In order to solve the economical crisis during1933 to 1935, the national government finally prompted the fiat on November 4th, 1935 after they had failed to ask for help from the US and the UK, which marked the beginning of China’s fixed exchange rate system. Fiat, nominally kept the independent status, however, it subjected to the US dollar and the pound on its exchange rate. The government had maintained the system until March 12 th, 1938 on which the unlimited trading of fiat was ended. This phrase can be divided into two specific stages by Sino-Japanese War.The first stage(1935.11.4- 1937.7.7),the government managed to stablized the foreign exchange rate through the expending of the foreign exchange reserves. The issue of fiat and flexible technical means. At second stage(1937.7.7-1938.3),the foreign exchange rate was stablized by adapting the Very Period Stability and Financial Measures to limit the bank run. KMT government spent huge foreign exchange reserves to maintain the stability of foreign exchange rate. In the end, maintain to main under the great pressure due to the large number issue of fiat and the arbitrage from the puppet army. The control of unlimited business exchange by the GMT government was eventually given up. From then on, China’s brieflyexisted exchange rate went into a new stage of nominal existence, actually the demice period.Secondly, the paper analyzed the back process of foreign exchange controller about the central bank of China and the level of fiat. Quantitative analysis shows the two prominent features, namely: the foreign exchange rate of fiat had a complete decoupling with silver,foreign exchange rates of fiat were very stable; The price of Fiat’s foreign currency was low.Finally, the paper gave the analysis of the effect of the fixed exchange rate system operation stage. Concerning economic stability, according to the price and industrial analysis,it deduced that the fixed exchange rate period helped China out of the previous economic crisis.Concerning international trade, fiat’s fixed exchange rate was good to avoid exchange rate risk for importers and exporters. Under the period of fiat’s fixed exchange rate, the rade of China was improved and the deficit was reduced.These things appeared under the reverse action of war, in July 1937,it should be attributed to the fixed exchange rate system of fiat’s currency undervaluation.Through these studies and the integration of the full text,the main conclusions are as follows:Firstly,modern China and other counties showed different evolutions of exchange rate system paths before 1938. Other countries showed a fixed exchange rate system during the gold standard period,while China showed a floating one.The direct reason leading to the discrepancy of the paths of the exchang rate system evolutions between China and other countries was the discrepancy between the Chinese and foreign currency standard caused by the outmoded currency construction,at the same time,the root cause was the modern economic backwardness and to be forced to open caused by China`s "closed-door policy";Secondly,the currency basic discretion and influencing factors under the modern China floating exchange rate system were in the charge of the foreign powers,what`s more, the operation of the fixed exchange rate system was also rely on the support of the US and the USA.So, generally speaking,the changing process of modern China`s exchange rate system was a passive adaptation result under the impact of the external factors.Thirdly,the financial institutions construction led by central bank lag behind the development requirements of the exchange rate system;Fourthly, the economic performances during Chinese silver`s foreign currency exchange rate declining period and the fiat’s undervalued period were better than those during China`s foreign currency exchange rate rising period; Finally,either the floating exchange rate system period or the fixed one of modern China,foreign exchange rate control could achieve certain results when the crises appeared.In terms of the methods, this paper used three combinations and a comparative methods,namely:Firstly,the combination of historical narrative and economics analysis.The paper used the historical narrative for chronological description of the events.In order to explain the economics principles of some contents,the paper used the method of economic analysis.Secondly,the combination of qualitative analysis and quantitative analysis.Qualitative analysis for explaining the nature of the internal regulations and laws of economic phenomena.Quantitative analysis for explaining the relationship among the various economic variables.Thirdly,the combination of inductive and deductive.For some scattered, sporadic historical data,the paper used the inductive method.For some contents,we can not get inspiration from the existing literature,so the paper used deductive method.In addition, the paper also used the comparative method.Innovations of this paper are as follows:Firstly,the innovation in the research field.Until now,scholars haven`t researched the real exchange rate system of modern China from 1840 to1938 for nearly a hundred years time,and there have no records about that in the writings of financial history.The research of this paper is the first to explore the field of modern China`s exchange rate regime.Secondly,the innovation in historical mining and neat of modern China`s exchange rates.It is rarely possible to look up a complete and uniform data of modern Chinese foreign exchange rates.Existing literature documented historical exchange rates of different fragments,and some academics have also finished the mining works of modern China’s foreign exchange rates partly. Due to the complexity of the modern Chinese currencies,these historical records can not be used on modern China’s foreign exchange rate longitudinal comparison.While,this article can eventually sort out a more complete and unified units modern China`s foreign exchange rates data,that is a major innovation of this article.Thirdly, innovation in research paradigm.This paper attempts to combine the first paradigm and the second paradigm of the economic history,so the paper gave a variety methods to analyze this topic.Lastly, the innovation in research period.This paper gave a study form 1840 to 1938 for nearly one hundred years,which through the Qing Dynasty, the Northern Government, and National Government times.They are different about social backgrounds, especially monetary backgrounds. This paper is the longest period among existing research on modern Chinese exchange rate issues.
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