Taomo Zhou – Special Zone Currency: Shenzhen’s Monetary Experiment and China’s Foreign Exchange Reform

Hong Kong Institute for the Humanities and Social Sciences

Delta on the Move Lecture Series
Special Zone Currency: Shenzhen’s Monetary Experiment and China’s Foreign Exchange Reform

Professor Taomo Zhou
National University of Singapore

Date/Time: December 18, 2024 (Wednesday)/4:00 pm HKT or 9:00 am CET
Venue: Rm 201, May Hall, HKU

Join us in person at May Hall or via Zoom using the following link: 
https://hku.zoom.us/webinar/register/WN_3XbmiOI7SXaMNyI7p1Km1w

Abstract
Between 1981 and 1985, policymakers in the People’s Republic of China (PRC) initiated discussions and preparations for the issuance of a “special zone currency,” a proposed legal tender designed exclusively for use in Shenzhen, the country’s first Special Economic Zone (SEZ). During this early reform era, as Shenzhen opened to international trade and foreign investments, three currencies simultaneously circulated in the SEZ: the PRC’s official currency, the Renminbi (CNY); the Foreign Exchange Certificate, designated for tourists, members of the Chinese diaspora, and entities eligible for foreign trade; and the Hong Kong Dollar (HKD). Despite its official prohibition in mainland China, the HKD was widely accepted and even preferred by local restaurant owners, shopkeepers, and taxi drivers. Interestingly, Chinese authorities themselves showed a preference for HKD. To bolster the state’s foreign currency reserves, the Shenzhen Municipal and Guangdong Provincial Governments mandated that Sino-foreign joint ventures pay their electricity bills in HKD. The proposed special zone currency aimed to resolve the confusion caused by the coexistence of these three currencies and, more importantly, to “expel the Hong Kong Dollar,” which had become the de facto dominant currency in Shenzhen, overshadowing the CNY. Despite these plans, the proposal for a special zone currency was permanently shelved in 1985, even after the Shenzhen Municipal Government had gone so far as to stockpile special paper for printing the currency. This presentation examines the debates among Chinese economists, policymakers, and foreign advisors from Japan and Singapore regarding the special zone currency, highlighting how Shenzhen’s aborted monetary experiment became a pivotal chapter in the history of China’s foreign exchange reform. It also underscores the experiment’s implications for the Chinese government’s ongoing efforts to internationalize the CNY.

About the Speaker
Taomo Zhou is an Associate Professor in the Department of Chinese Studies and Dean’s Chair in the Faculty of Arts and Social Sciences, National University of Singapore. Her first book, Migration in the Time of Revolution: China, Indonesia and the Cold War (Cornell University Press, 2019), won a Foreign Affairs “Best Books of 2020” award and an Honorable Mention for the 2021 Harry J. Benda Prize from the Association for Asian Studies. Taomo is currently working on her second book project entitled “Made in Shenzhen: A Global History of China’s First Special Economic Zone,” which is under advance contract with Stanford University Press.

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