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01 / 05
Lesson Plan: Hangzhou (Paper Money)

Blog Post | Human Development

Lesson Plan: Hangzhou (Paper Money)

In this lesson, students will learn about a commercial innovation that originated in China and has now spread all over the world: paper currency.

You can find a PDF of this lesson plan here.

Lesson Overview

Featured article: Centers Progress, Pt. 12: Hangzhou (Paper Money) by Chelsea Follett

Despite China having the second biggest economy in the world and being the nation with the world’s largest population today, many students know surprisingly little about the country’s history. Even students that know a bit about China have probably never heard of the city of Hangzhou, one of the ancient capitals of China and now its fourth-largest metropolitan area with a population of over 20 million.

This article will give students a glimpse into the fascinating history of Hangzhou during its “golden age” and relates many of the innovations that made the city one of the most influential centers of progress in world history. In particular, students will learn about one commercial innovation that originated in China and has now spread all over the world: paper currency.

Warm-up

Imagine that paper money, electronic payments, and credit and debit cards disappeared tomorrow. In this alternate reality, the only way to pay for things would be by using small metal coins.

How would this change affect you, your family, and your friends?

  • Take a few minutes to reflect on how life would be different if you could use only coins to make purchases.
    • How would you feel? Do you think the transition would be easy?
    • Do you think using only coins to pay for things would be an impossible task? What would be the biggest challenges for you and your family?
    • Would there be any advantages to this old style of payment?
  • Write a paragraph describing how this change would affect your life.
  • Share your paragraph with a partner. Reflect and discuss together:
    • In what ways would you and your community be worse off with only the use of coins?
    • Would you want to live this way for a day, a month, or even a year?
    • Do you think it is possible or desirable for your town or city to flourish without the use of paper money?
  • Today you will learn about the origin of paper money in China. Before we begin, answer these questions:
    • Why do you think paper money was invented in the first place? What were the advantages of paper money over the types of money used previously?
    • What technology do you think had to be developed in order for paper money to be introduced?
    • Make a prediction: Do you think paper money originated with a central government or as an innovation of private businesspeople?

Questions for reading, writing, and discussion

Read the article, and then answer the following questions:

  • What were some of the characteristics of the economy of Hangzhou during the Song dynasty? List at least three.
  • The article mentions two advantages of using paper currency over coins. What were these advantages?
  • What role does Hangzhou play in the economic life of China today? Why is it still one of the most important cities in China?
  • According to the article, at what point did Hangzhou become the most important city in China?
  • What critical piece of infrastructure first built during the 600s CE allowed Hangzhou to be connected to the cities of northern China?
  • What technological innovation allowed for the mass production of books, documents, and banknotes during the Song dynasty? Be specific. What was the critical invention devised by Bi Sheng?
  • Despite Hangzhou being forward-thinking in many respects, what notable practice now seen as inhumane and cruel towards a particular group arose during the Song Dynasty?
  • What were some of the cultural milestones of the Song dynasty in each area of achievement? How did these innovations improve the lives of many ordinary Chinese people living in cities like Hangzhou? Fill in the chart below.
What were the achievements during the Song dynasty?How were the lives of ordinary Chinese people improved as a result?
Culture (including clothing, literature and poetry, cuisine, and architecture)
Technology
Economics
  • How did paper currency evolve? Write a short description of its origin and development from the Tang dynasty through the Song dynasty.
  • What were some of the features of the banknotes printed by the Chinese central government in Hangzhou beginning in 1265 CE? Why did the Chinese people ascribe value to this form of currency?
  • If not managed correctly, what is one of the dangers of using paper currency in an economy? What are the consequences for ordinary people of this type of fiscal mismanagement?

Extension Activity/Homework

Watch and Learn from a China Scholar

Dr. Valerie Hansen teaches Chinese history at Yale University. She is a well-known expert on one of the most famous Chinese paintings, a masterpiece known as the “Qing Ming Scroll,” which was commissioned by a Song dynasty emperor. Although the cityscape depicted in the scroll is a fictional rendition of an “ideal” Chinese urban area during the Song dynasty, it provides extensive evidence of the technological sophistication and economic innovations that were present in Hangzhou at the time. Watch the video of Dr. Hansen describing the entire scroll in detail. As you watch, find specific evidence in the scroll that exemplifies Chinese society during the Song dynasty.

Examples in the Qingming Scroll
Social organization
Politics and governance
Interactions with the environment
Cultural developments
Economic systems
Technology

Create a Virtual Tour of Hangzhou

Imagine that you are a tour operator in the modern city of Hangzhou. Your job is to promote your area to foreign visitors. Create a virtual tour of modern Hangzhou city using Google Presentation or PowerPoint and present it to your potential clients. What types of places would you like to show visitors to the city? How would you make Hangzhou appealing to them?

Find information on popular tourist sites in Hangzhou, such as:

  • West Lake
  • The Grand Canal
  • Leifeng Pagoda
  • Lingyin Temple
  • Jingci Temple
  • Yue Fei Temple
  • Longjing Tea Farms
  • Xixi National Wetland Park
  • Qinghefang Ancient Street
  • Wuzhen Water Village

On a Google Presentation or PowerPoint, create a slide for each site you wish to include in your presentation. Include images of each site, its location on a map of Hangzhou, and its importance to the history of the city. Make your slideshow as interesting as possible to entice potential visitors to visit Hangzhou.

World Bank | Quality of Government

Côte D’Ivoire’s Land Reforms Are Unlocking Jobs and Growth

“Secure land tenure transforms dormant assets into active capital—unlocking access to credit, encouraging investment, and spurring entrepreneurship. These are the building blocks of job creation and economic growth.

When landowners have secure property rights, they invest more in their land. Existing data shows that with secure property rights, agricultural output increases by 40% on average. Efficient land rental markets also significantly boost productivity, with up to 60% productivity gains and 25% welfare improvements for tenants…

Building on a long-term partnership with the World Bank, the Government of Côte d’Ivoire has dramatically accelerated delivery of formal land records to customary landholders in rural areas by implementing legal, regulatory, and institutional reforms and digitizing the customary rural land registration process, which is led by the Rural Land Agency (Agence Foncière Rurale – AFOR).

This has enabled a five-fold increase in the number of land certificates delivered in just five years compared to the previous 20 years.”

From World Bank.

World Economic Forum | Financial Market Development

How the Rise of AI in Indonesia Is Expanding Financial Inclusion

“Indonesia is at a pivotal moment in its digital transformation. With over 280 million people spread across 17,504 islands and over 180 million smartphones, connectivity has never been higher.

Internet penetration approached 79% in 2024, reflecting the nation’s swift embrace of online platforms. Only a decade ago, nearly half of Indonesia’s adult population remained unbanked. Thanks to rapid advancements in financial technology, the financial inclusion index has climbed to almost 84%. Had AI been as pervasive 10 years ago, this transformation could have been even faster.

Though digital adoption is a global trend, Indonesia’s trajectory is distinct, shaped by supportive government policies, a vibrant fintech sector and a surging digital economy.

Over the past decade, these factors have converged to accelerate financial inclusion – from 49% in 2014 to around 83% in 2023. This remarkable leap is equivalent to adding the population of Switzerland seven times to Indonesia’s banking system.”

From World Economic Forum.

Our World in Data | Financial Market Development

Mobile Money Accounts Are Surging Globally

“Mobile phones and the Internet have enabled the growth of mobile money accounts in regions with limited banking infrastructure. These accounts provide simple financial services like deposits, transfers, and payments to hundreds of millions of people.

As this chart shows, the number of active mobile money accounts globally has grown from 13 million in 2010 to more than 640 million in 2023. This is based on data published by the GSM Association.

While the adoption of mobile banking was almost exclusive to Sub-Saharan Africa in the early 2010s, Asian countries have seen significant growth in recent years.”

From Our World in Data.

Blog Post | Financial Market Development

The Democratization of Investment | Podcast Highlights

Chelsea Follett interviews Jennifer Schulp about how technology and regulation are shaping the future of investment.

Listen to the podcast or read the full transcript here.

Tell me about some hopeful trends or progress we are seeing in the financial industry.

One of the most hopeful trends in the financial industry is broader access to financial investment. Traditionally, investment in the stock market has been limited to the wealthy. Investing in the stock market is really important because, over the past decades, the S&P 500 has returned approximately 8 percent per year, which is way more than other non-equity investments.

Financial access has improved tremendously over the last 50 years. In the mid-70s, to make a stock trade, you had to call your broker on the phone and tell them what you wanted to trade, and they would charge you something like $50. So, you didn’t want to place a trade unless you were placing a large trade because otherwise, the fee would overwhelm the trade. And you didn’t want to trade very often. All of it made it very difficult for regular people to invest in the stock market. Over the course of decades, those fees came down as there was additional competition brought into the brokerage space.

In the 1990s, we saw the rise of internet trading, which allowed you to place trades on your own. In 2015, Robinhood started offering no-commission trading on a phone app, which allows people to trade regularly without worrying about fees eating into their profits or adding to their losses. People can now take some money from each paycheck and put it in the stock market. That’s been huge. The entire brokerage industry is now moving towards phone access for easy, cheap trading, and that’s made a huge difference in the number and type of people accessing investment in the stock market.

In 2020, during the pandemic, we saw a massive rise in retail trading that many wrote off to people being bored while they were stuck in their homes. However, a lot of those investors have remained in the market, so what might have started as a pandemic-induced interest in the stock market has become part of a long-term trend towards additional retail trading that has brought in more racial minorities, more low-income people, and more young people.

Easy and cheap trading has also allowed people to experiment with the stock market and learn by doing. There was a study that came out not too long ago by FINRA and NORC at the University of Chicago that looked at the investors who opened accounts in 2020. And they found that those who stayed in the market showed an increase in their financial literacy. Having this access helped them allocate their capital better. So, we have more people invested in the larger economy, and they are getting smarter about it. The benefits will compound over time.

What are some of those potential benefits?

Certainly better personal financial outcomes. Of course, some people are going to make poor decisions. You can’t say, “Because you put money in the market, you’ll be better off.” But for people looking for long-term investment options, the stock market is the greatest wealth generator we’ve ever seen.

I think this could also drive economic growth for a couple of reasons. One, investment gives people a stake in society and the economy, and that itself can drive growth. Two, having retail investors put money that might otherwise be under the mattress or in a low-interest savings account into businesses allows those businesses to flourish.

Are there any benefits for those who are trying to start businesses?

That brings up a new set of questions. What we’ve been talking about so far has been retail investment in public equities markets. But the stock market doesn’t generally provide startup capital. You have to be a mature company to want to bring an initial public offering that gets you listed on the stock exchange. Private market investing is where startup investing happens. And in the United States, far more money is raised in private markets than in public markets. The average person is not allowed to partake in private investment in the United States, as well as in most economies across the world. In the US, you need to be what’s known as an accredited investor, which essentially means you make more than $200,000 a year or you have a net worth of over a million dollars.

This is a very arbitrary standard. You could win the lottery tomorrow and suddenly become an accredited investor, and that doesn’t make you any smarter at investing than you were the day before. It doesn’t make you any more of a capable investor than someone who, say, studied startup investing in their MBA program but isn’t yet making enough money to be allowed to invest themselves. And all of this is a problem because it means the government is standing in the investor’s shoes and making decisions for them. Are they smart enough? Are they rich enough? Is this a good idea for them?

Let’s talk about entrepreneurs, as you asked. People trying to start businesses tend to turn to their community. They tend to raise money from the people that they know best. But if you are a minority or live in a rural or low-income area, you likely don’t know many people who meet that accredited investor standard. You’re already at a disadvantage in raising money and getting your business off the ground. That hurts entrepreneurs in less wealthy communities, the economy as a whole, and potential investors who don’t have the opportunity to share in the growth of that business.

The house recently passed three bills looking to reform the accredited investor definition; two have codified an SEC modification to the rule allowing people who have passed certain securities tests, such as brokers or investment advisors, to qualify as accredited investors, even if they’re not wealthy enough. The third bill is a bit broader; it opens up the testing concept to allow, if passed by the Senate and signed by the President, anyone who passes a test to be able to invest as an accredited investor. There will be costs associated with the testing, and it doesn’t get at the underlying paternalism, but it is a step in the right direction.

Could you talk about ESG?

ESG is actually two distinct concepts, and it’s important to identify which one we’re talking about. It can be broken down into a dichotomy that I’ve borrowed, which is value versus values investing.

“Value investing” in the form of ESG just refers to using environmental, social, or governance factors to analyze whether a company faces risks that might affect its financial performance. Where ESG sounds a little bit different is when we think about it as “values investing.” That kind of ESG is about sacrificing financial return to reach a certain outcome with your investment, like lowering carbon emissions. Of course, investors should be free to invest their money as they see fit. If they want to invest in saving the whales, they should have that opportunity. But it gets trickier when a company or asset management firm makes those decisions about what to do with their investors’ money without being upfront with them. That’s a question of disclosure and whether or not the funds are being clear with investors.

Government mandates are the key place to focus on here because, ultimately, the market should decide whether investing in ESG is the right way to go. Europe has decided, writ large, that the way to tackle climate change is to centrally plan how money will flow through the financial system to choke off funds for non-green investment. Supporting that is a host of European directives on sustainable finance that include a lot of disclosure by companies about how they, too, will meet net-zero goals. Europe has what we in the securities industry refer to as a “double materiality standard,” where European companies are not only supposed to disclose information that might impact the company’s financial performance but also how their company impacts society and the environment. All of this comes with pretty heavy costs.

The United States is now considering how far to follow Europe down that line. The Securities and Exchange Commission (SEC) has proposed a sweeping climate risk disclosure framework. It’s different from the European framework in that the SEC at least recognizes that they don’t get double materiality; the SEC is only allowed to require companies to disclose information that investors might find useful in deciding whether to invest in the company. However, the SEC’s climate risk disclosure rule goes well beyond that. It would require all US public companies to disclose an awful lot of information about climate risk, including scope one, scope two, and, for many companies, scope three, greenhouse gas emissions. What’s important here is that this type of disclosure is not a small undertaking. It’s going to be a massive drag on public companies.

You also oppose government rules that would restrict voluntary ESG-related disclosures. Can you tell me about that?

Sure. There’s been some legislation introduced, some of it passed, from state-level Republican legislatures that prohibits the use of ESG in investment. But this broad prohibition is also not the right answer. In fact, it is itself values-based and seeks to impose an ideology onto investing.

In addition, there are real costs to blanket prohibitions of ESG. One is that ESG as value investing can sometimes yield better returns. Pensions in some states that have introduced legislation to prohibit the consideration of ESG factors have released analyses showing that over the course of 10 years, the pensions might be losing billions of dollars in returns by having their investment pool artificially limited.

Another example is Texas, which prohibits localities from doing business with financial firms that are, quote, “boycotting the fossil fuel industry.” A study done not too long ago showed that the cost of municipal borrowing has gone up in Texas because many firms exited the market, meaning taxpayers in Texas are now paying more for municipal building projects. We shouldn’t forget that narrowing the scope of investment opportunities also narrows the opportunities for growth.

Could you speak about the potential impact of AI on investment and the financial industry?

Many people don’t understand how much AI is already part of the investment industry. For example, AI is already involved with investment research, predicting stock value, and portfolio management. That’s all going on behind the scenes.

I think that there’s real potential with respect to financial advice. AI could make investment advice as accessible as trading on your phone is today. For a long time, we’ve had what are known as robo-advisors, which are essentially chatbots with a narrow tree of advice based on a set of questions. More sophisticated large language models could give individualized investment advice that considers all sorts of circumstances at a very low cost. In the future, you may be able to go on your computer or phone and tell the LLM, here’s what my investments look like; what should I do next? That’s powerful stuff, assuming that the regulators allow something like that to happen.