Privilege money

China started to issue FECs on April 1, 1980. Before they were finally withdrawn from the market on January 1, 1995, China had a 15-year history of a dual-track currency system under which two kinds of currencies - renminbi yuan and FECs - were in circulation in the market simultaneously.

FECs were originally designed to serve visitors from overseas who came to China after the country moved out of isolation in 1978. The country very quickly embraced a growing number of foreign visitors, as well as Chinese returning from Hong Kong, Macao and Taiwan.

At a time when the market supply was tight, Chinese people had only a fixed supply of daily necessities such as grain, pork, cloth and bicycles. The government built up hotels, restaurants and stores to serve people from overseas.

As foreigners were not allowed to hold and use renminbi then, the State Council authorized the Bank of China, which had the strongest foreign currency business among China's four State banks at the time, to issue FECs in 1980 to enable overseas visitors to purchase goods in China.

When foreigners and Chinese from Hong Kong, Macao and Taiwan arrived, they were told to go to Bank of China outlets or other designated places to change their foreign currencies into FECs. When they left the Chinese mainland, they could choose to covert FECs back into hard currencies or just hold on to them for use in their next trip. Many foreigners just called the FECs "tourist money".

The FECs had seven denominations - 100 yuan, 50 yuan, 10 yuan, 5 yuan, 1 yuan, 5 jiao and 1 jiao, all with pictures of China's scenic spots like the Great Wall, Three Gorges, and the Temple of Heaven at the back.

FECs were privileged money. As Kenneth Starck, a journalism professor from the University of Iowa in the US who came to China in 1986, described in his book, The Dragon's Pupils: "If money talks, FEC speaks louder than renminbi by 50 per cent or more." With FEC, a person can buy goods imported to China, purchase at special shops and change it back to US dollars - these were all things that could not be done with renminbi at the time.

FECs could only be used in certain approved designated outlets - such as hotels, Friendship Stores, and duty-free shops, where people could find luxury imported goods - ranging from Remy Martin Xos to Marlboro cigarettes and from color TV sets to Swiss watches - items which were popular with foreigners. Popular Chinese artifacts and silks were also available in the Friendship Stores.

Editor:Du Xiaodan