The currency that collapsed faster than the war it tried to fund

Wealth & Business · Published 18 October 2026 Swipe more like this →

In short: In 1948, the Republic of China launched the Golden Yuan to save a collapsing economy. It was a desperate gamble to seize private gold and stabilize a hyperinflated currency. Instead, it triggered one of history's most rapid monetary collapses, turning national wealth into waste paper in months.

The Golden Yuan was born from the wreckage of the 'Fabi' currency. By 1948, the Nationalist government had printed an astronomical amount of Fabi to fund the war against Communists, with the supply exploding from 556.9 billion yuan at the war's victory to 604 trillion yuan in just three years. To halt this hyperinflation, the government introduced the Golden Yuan in August 1948, attempting to force citizens to exchange gold and foreign currency for the new notes at a fixed rate of 0.22217 grams of gold per yuan.

The reform was structurally doomed. While the government seized significant assets—including 1.663 million taels of gold and millions of silver ingots and U.S. banknotes—it failed to establish a sustainable backing. The issuance had no real cash provision and no limits. Because the total Fabi currency in circulation reached 663 trillion yuan, the initial 200 million yuan in gold notes were insufficient to cover even a fraction of the debt. By initiating gold note issuance at 2 billion yuan, the state triggered an immediate inflation spike equal to tenfold the ultimate Fabi currency value.

The human cost was devastating. The urban middle class, the government's primary supporters, suffered such massive economic losses that it contributed to the Nationalist government's rapid defeat in the Chinese Civil War. In Shanghai, the situation turned violent; Chiang Ching-kuo used 'tiger hunting' tactics, imprisoning and executing capitalists who refused to comply with government orders. By the time the People's Liberation Army overran major cities in 1949, the Golden Yuan was effectively worthless, with some regions issuing notes as high as 6 billion yuan to keep up with the spiraling prices.

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