Challenges and Achievements of the Nanjing National Government's Fiat Currency Reform from 1935 to 1937

Abstract

The Fiat Currency Reform in China holds a significant milestone in its financial history. In the 1930s, the Nanjing Nationalist government successfully tackled the deflation caused by the silver crisis and achieved national currency unification through currency reform. Simultaneously, this reform drove domestic economic development, preparing the nation for the subsequent resistance against Japanese aggression. Before this period, numerous scholars had examined currency reform. However, few have connected this policy and its profound impact on the current economic situation. This paper aims to study the currency reform by analyzing its historical context, specific measures, and its effects. It also summarizes its relevance to contemporary China's economy. Presently, China faces issues such as economic stagnation, a sluggish domestic market, and a heavy debt burden. The Chinese government can draw lessons from the currency reform by implementing policies like increased currency issuance and lowered interest rates to stimulate the market, attract foreign investment, and find a way forward for the future development of the Chinese economy.