China’s Foreign Exchange Certificates: Ten Years Gone By

It is a measure of how fast time flies when we suddenly realize that in has been ten years since China finally phased out FEC, and that an entire generation of expatriates has no idea about what they were, their purpose, or even what they looked like.

Here at China Expat we’ve managed to get together an entire collection of the old FEC notes, and reproduce them here for you. But what were they and how were they used?

Back in the late seventies, as Deng Xiao Ping began the long road to reform in China, the protection of the Yuan “People’s Money” was so great that it was actually illegal for foreigners to possess any. To get around this, China developed the concept of the “Foreign Exchange Certificate” (FEC) which had to be purchased rather like one does for travelers cheques at your country of origin before traveling to the PRC. Issued by the Bank of China, they sold at a premium of about 20% more than the actual value of the Yuan. Carrying your FEC carefully with you, and also as a means to prevent and monitor the movements of foreigners and their contact with local Chinese, FEC were also only allowed to be used to certain approved designated outlets – various hotels and the so-called “Friendship Stores” (some of which still exist by that name today) – which stocked luxury ‘foreign goods’ – just the sort of thing foreigners wanted to buy while in China – and a ramshackle collection of expensive local silks and a few other tourist trade artifacts.

What foreign luxury goods? Well, even as little ago as 1992, the only place you could buy a bottle of Johnnie Walker Red Label Whisky or a packet of Marlboro cigarettes in Shanghai was the Friendship Store by the Peace Hotel – and only foreigners, paying in FEC could have them. Locals had to make do with local brands. Restaurants too, were FEC designated, and those that were not – the vast majority – were not allowed nor permitted to serve foreigners. It’s easy to forget how quickly China has developed since then.

Needless to say, with the average laowai getting fed up of being restricted to eating in expensive (and not very good) FEC designated restaurants and shops, and the local Chinese wanting access to premium foreign brands – a whole generation of street money-changers began appearing, risking prison (as did the hapless foreigner) to change FEC for you into RMB. “Changee FEC?” was the first mantra of China’s street hustlers – the direct ancestors of “Copy Rolex?”.

Furtive deals had to be done in dark alleys, as both laowai and Chinese looked over their shoulders to see if any police were nearby as the deal was struck. Completed, the local lad would go and raid the Friendship Store for a much sought after packet of Marlboro, while the foreigner was free to go and eat in local restaurants and shops with his illicit RMB.

After 1993, things started to get a bit out of hand with FEC as an entire currency black market began to sweep the nation, the 20% markup on value, and the increasing availability of foreign brands making them redundant. The secret police had better things to do than try and catch odd furtive FEC black market trader, and they were phased out over a two year period, finally meeting their demise in the summer of 1995. With the Bank of China changing FEC at face value for RMB – by now legal tender for foreigners, the FEC was consigned to the history books, and apart from a few low currency notes, have all but disappeared from view.

However, for a look back down memory lane – it was only ten years ago – here from our own collection is the entire range of FEC – from just over a decade away the only currency in China that foreigners were legally allowed to possess.

Related posts:

1. Rachel DeWoskin “Foreign Babes in Beijing”

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