When gold and silver from the Americas was exported abroad, the effects on the rest of the world were tremendous. In Europe, and in Spain especially, the imports of these precious metals caused lasting inflation. In China, foreign supply overcame a previous scarcity of silver, transforming the composition of the local money supply. In time, Spanish and Mexican pesos came to be widely used in trade with China and the coins even became ubiquitous. Indeed, the Chinese yuan was even based on this Spanish-American coin.


            Paper money in China, commented on by Marco Polo in the 13th century, was overprinted and eventually abandoned. Silver took over the role of paper money, at least in large-scale trade and payment of taxes, particularly after the late-16th century. By contrast, gold was not particularly useful. Regardless though, the large majority of small transactions were made in copper coins. So, for most of the Ming Dynasty (1368-1644), especially for all but its last century, it’s easy to overestimate the role of silver.

            A large reason is that silver deposits were rare in China and the country produced few silver coins of its own. Tax records suggest that between 1390 and 1520, annual silver production averaged approximately 11.3 tons, not a large amount. Supplementing this production, some silver entered China from Japan after meaningful silver finds there in the 1530s. Eventually though, European merchants began arriving with silver of their own. Silver could be exchanged for more products in China than in Europe so the metal naturally found its way to Asia. The work of two scholars, Dennis Flynn and Arturo Giráldez, found that one ounce of gold could buy eleven ounces of silver in Amsterdam but this silver could be traded for two ounces of gold, or its equivalent in merchandise, in China.

Pesos to China

            It’s been estimated that between 1493 and 1850, four-fifths of silver mined worldwide was extracted from Spanish-American mines. So, Spanish coins ended the scarcity of silver in China. A mint was established in Mexico in 1535. Then, in the late-16th century, large volumes of silver from the Americas began to show up in China, particularly when the ‘Manila galleons’ began arriving in Asia in 1565. Economic policies introduced in Spain in 1552 encouraged Spanish silver to flow abroad as the country tried to curtail inflation at home by promoting imports and restricting exports.

            Until the Spanish ‘milled dollar’, with ridged edges on the circumference, was introduced in 1732, Spanish coins minted in America were often irregularly shaped. However, while its production was not subject to strict quality control, the coins were not purposely debased either. Indeed, prior to the 20th century, the Spanish and later the Mexican peso only underwent two 18th century devaluations and these were both minor. This was remarkable stability, particularly considering Spain’s financial difficulties at various times in history.

            The mint in Mexico would coin Spanish pesos, also known as the real or dollar, the latter name given by merchants from other European countries who traded with them. These were exported via the port of Acapulco and arrived in China via Manila where the coins were common by the 1570s. At Manila, the coins would change hands as Chinese junk captains took the silver carried on Spanish galleons as payment in exchange for silks and other goods that would be sent back to America. It is estimated that in 1597 alone, some twelve million pesos reached China through Manila; the peso was the first foreign coin to enter China in such quantities.

Route of ‘Manila Galleons’ (Source: World History Encyclopedia)

            Some other foreign coined silver would enter China through Macau. Whether by Macau, Manila, or elsewhere, Spanish coins arrived in China’s coastal provinces like Guangdong (Canton), Fujian, Zhejiang, and Jiangsu. Even conservative estimates pin the amount of silver imports in the late Ming Dynasty at approximately 33.9-48.9 tons per year, massive compared to China’s own domestic production. This silver was used to pay for purchases of Chinese silk and teas. Demand for these was so high that at least a third of Spanish America’s silver went to China.

Ingots to Coins

            Initially, Chinese merchants preferred to accept the metal in the form of ingots, called sycee, usually oval-shaped and resembling a boat or tortoise shell. This was perhaps because the early Spanish coins were so irregular anyway. Thus, Spanish coins would simply be melted down, after having been minted in the first place not long before the voyage, and cast into these ingots. However, there was no standardized ingot; a wide variety of purity and weights were used since they were made by private silversmiths and not an official mint.

            Later, the metal would circulate in its coin form. Spanish, and later Mexican, coins were valued because they were in silver and ubiquitous but also because the purity and weight became very consistent. The coins were also clearly marked with year and mint.


            In the 18th and 19th centuries, the peso became ubiquitous in China. Even in Guangdong, where a myriad of foreign monies was used in trade, the Spanish peso was most common. Various other coins might be accepted for payment but never as widely as pesos; even the traditional ingots became comparatively rare. It was easier to trust a coin like the Spanish and Mexican pesos.

            Because only the Spanish coin was accepted with such ease, merchants from outside the Spanish Empire had to acquire their pesos through trade and direct these to make purchases in China. When Spanish coins were rare, or unobtainable by foreign merchants, such as during times of war, merchants active in China had to find alternatives. For example, during the American War of Independence, when Britain and Spain were at war, British merchants had reduced access to the Spanish coins. As a result, the British East India Company sent dies and equipment to have counterfeit Spanish coins minted in Canton for itself at their usual purity. However, the production of the coins was left to corrupt local officials who simply debased the coins and kept any extra profits for themselves; the coins’ true composition was found out.

            Earlier than this example were attempts by both the English and the Dutch to introduce their own versions of the peso for Chinese trade around 1600. Both were unsuccessful efforts. Even far later in British Hong Kong, local Hong Kong Dollar banknotes were backed by vaults filled with Mexican silver pesos. Sterling or gold was not locally relevant.


           Authentic Spanish and Mexican coins were not safe from fakes. Because counterfeit and debased imitations of Spanish money eventually became common, merchants and money changers used chopmarks to attest to the quality of coins they used in transactions. A steel die was used to stamp-punch a mark on a coin used by a merchant firm. This practice dates to the days when Spanish coins began appearing in China, because they were novel in the 1500s and so were regarded as a form of foreign ingot, unfamiliar to the Chinese. While the coins were now ubiquitous, counterfeits meant the use of chopmarks became more important yet again in the late 18th century.

8 reales Carlos IV, Viceroyalty of New Spain with Chopmarks (Source: Wikimedia Commons)

           Interestingly, the average purity of silver coins in China was actually higher than those in Mexico and South America. Thus, the use of chopmarks to signal authenticity may have helped maintain the integrity of the coinage, boosting it beyond that found in the source countries.


            After Spain’s American colonies became independent, the old Spanish-American coins were replaced with new ones by the independent Latin American republics. These varied in design and many were regularly debased. Merchants’ trust in the coins had fallen. Even still, they were accepted, though chopmarks became more important validation of a coin’s value. As the 19th century went on, the United States became a larger provider of silver to China at the expense of Latin America.

            The mint in Mexico was closed in 1868. With this interruption, new foreign currency began to circulate more widely alongside the old pesos. These new coins were the likes of the American trade dollar and Japanese silver yen and also included locally minted alternatives.  Indeed, Chinese mints finally began making their own silver coins in 1889.

           The legacy of the peso in China remained profound. A standardized Chinese yuan was eventually introduced but was tied to the value of the old Mexican peso. Pesos continued to circulate, even in Hong Kong, where they were legal tender until 1935. The silver standard has now long since been abandoned but in addition to that of China, other Asian currencies in use today, like Malaysia’s ringgit, have a history that starts with the old Spanish-American pesos


            Some see in the introduction of Spanish money in China evidence of the tremendous extent of globalization even centuries ago. Certainly, the Manila Galleons carrying silver to Asia represent the last link in a global trade system encircling the world ever since. The presence of pesos in China also marks a rebalancing of the global economy as the metal relocated from where it was plentiful, namely the Americas, to where it was scarce, Asia and China especially. In exchange, China had to export more to the rest of the world than it imported while America and Europe had to import more than they exported for this silver to flow elsewhere. When the world was not connected in this way, this trade between merchandise and precious metals did not exist and could not exist between China and the West.

More from the Tontine Coffee-House

           Read about the inflation caused by the introduction of American precious metals in Europe and the role of the Spanish piece of eight in establishing conventions for stock and bond pricing. Also, learn more about foreign money in China with this post about the American trade dollars and this one elaborating on the many coins used in 19th century China. Consider subscribing to this blog’s newsletter or checking out book recommendations, which include many of the sources often referenced in my posts. 

Further Reading

1.      Brothers, Eric. “Long Table 141. Silver Coins and Chopmarked Coins in China, up to 1873.” YouTube, American Numismatic Society, 12 June 2023.

2.      Heaver, Stuart. “How Mexican Silver Dollar Shaped China and Hong Kong’s Mint.” South China Morning Post, 7 Feb. 2018.

3.      Moisés, Rachel Piccolo. “The Rise of the Spanish Silver Real.” Sigma: Journal of Political and International Studies, vol. 23, no. 5, 2005, pp. 69–89.

4.      Sun, L., et al. “Global circulation of silver between Ming–Qing China and the Americas: Combining Historical Texts and scientific analyses.” Archaeometry, vol. 63, no. 3, 3 Nov. 2020, pp. 627–640.

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