Continuity between this life and the next is central to Chinese spirituality. The living are in constant dialogue with the dead: We offer our ancestors food and other gifts — including the fake currency known as “spirit money” — in exchange for them watching over us and guarding our interests.

As the two worlds are mirror images of each other, the burning of spirit money is an essential ritual in Chinese ancestor worship — a way to ensure the dead have the money they need in their afterlives.

There are many kinds of spirit money, but the most luxurious is xibo, or “tinfoil paper.” Consisting of bamboo paper coated in a thin layer of tin, it’s relatively expensive to produce. Often, people will fold them into something resembling a horse’s hoof, imitating the look of silver ingots produced in the late imperial era. For that reason, they’re sometimes also referred to as zhiding, or “paper ingots.” According to the Dutch Sinologist J. J. M. De Groot, the Chinese faithful believe these ingots are transformed by fire into actual silver, which then wafts into the hands of the deceased through the rising plumes of smoke.

The precious metal the tinfoil symbolizes, silver, only came into widespread use as currency during the Ming (1368-1644) and Qing (1644-1912) dynasties. The origin of tinfoil money is likewise closely tied to Zhu Yuanzhang, the rebel who later founded the Ming dynasty.

Zhu’s rebellion was based near the wealthy Jiangnan region, a Chinese term for the lower reaches of the Yangtze, including parts of Zhejiang and Jiangsu provinces. In the late 14th century, it was customary for Jiangnan residents to dedicate silver pieces to ancestral shrines in their homes. According to legend, when Zhu led his uprising against the ruling Mongols, he borrowed these pieces from families to pay his troops, promising to return them when peace was restored.

After becoming emperor, however, Zhu claimed he was unable to reimburse the families. One of his officials suggested that, since the spirits were already in the underworld, they had no use for real silver. Tin was a far more economical option and would allow him to pay back his debt. Zhu took his advice. Powerless to resist their new monarch, the common people had no choice but to make ingots out of tin.

There are two layers of deception at play in this story. The first actually conforms to longstanding Confucian mourning practices in which fake goods were dedicated while real items were saved for the living. In this case, by using tinfoil-coated paper ingots in place of silver, the inhabitants of Jiangnan were able to placate their ancestors.

The second is the Ming court’s choice to renege on its obligations and force residents to accept the paper ingots in place of real silver. Silver was valuable, and the donations that Zhu had taken from families represented for many a sizeable chunk of their life savings. The “money” the emperor gave them in return was purely symbolic.

In other words, the founding myth of xibo is a story of how the people’s wealth was siphoned away by the state. And while the legend itself is not necessarily true, it reflects a very real conflict between the rich Jiangnan area and the newly formed Ming state, one that ended in a series of chaotic currency reforms and a vast transfer of wealth from the people to the government.

Zhu’s relationship with the Jiangnan region was complex. During his northern campaign against the Mongols, Jiangnan served as the army’s main source of funds. After the Ming dynasty was founded, the imperial court continued to impose significantly higher taxes on this region than the rest of the empire. Many historical sources speculate that Zhu’s severity toward Jiangnan stemmed from personal spite at local merchants who had backed his rivals.

Disproportionately high taxes weren’t the only way Zhu drained Jiangnan to fill his coffers. Almost from the moment his uprising began, Zhu made plans for a new bronze currency. After his victory, he issued an edict ordering its production nationwide. The plan came apart almost immediately — there simply wasn’t enough copper to go around, even after commoners were forced to hand over their coins and copperware to the state — and the Ming decided it would follow the Song (960-1179) and Mongol Yuan dynasties (1179-1368) in producing paper currency.

To promote the new notes, the Ming government stipulated that merchants had to use them to pay 70% of their taxes, with the rest paid in coins. Furthermore, while the common people were allowed to exchange their gold and silver for banknotes or have them crafted into jewelry or other items, they were forbidden to use them in commercial transactions. Anyone found to have violated this rule risked execution.

In essence, the new currency was a way for the government to acquire huge quantities of gold and silver in exchange for paper — an interesting parallel with the legend of Zhu Yuanzhang taking silver fragments from ancestral shrines in exchange for tin ingots.

Even the risk of execution couldn’t completely dissuade people from using gold and silver, however. The Ming produced too many of the notes, causing their value to plummet and inflation to spike. Fifty years after their introduction, their value had dropped to between a quarter and a seventh of face value. A century later, they were so worthless that the Ming used them as a kind of ceremonial currency not unlike spirit money, with the emperor handing out stacks of the bills as gifts around the Lunar New Year.

From the Song to the Yuan to the Ming, all three regimes tried and failed to introduce a paper currency of lasting value. Popular distrust of the notes was often grounded in their association with spirit money. Regarding the Yuan court’s decision to continue using paper notes, the official Zheng Jiefu commented that the adoption of paper money during the Song had been a sign of its impending collapse: “Paper money is for the spirits to use, not for humans. After the people of the Song dynasty began using the objects of the spirits, it was clear that the nation’s decline was only a matter of time.”

Eventually, the notes became a kind of shorthand for instability. In a short story from the Ming dynasty, a worker discovers upon returning home that the silver ingots he’d earned through years of hard work have turned to paper — a supernatural transformation that reflected widespread feelings of financial insecurity.

Ironically, the decline of paper money as a currency led to a resurgence in the use of xibo in funerary offerings. The chaos provoked by the Ming’s failed currency reforms inspired a widespread preference for silver over paper. As people came to associate paper money with instability, they longed for a return to currency with a real, inherent value. That desire for realism carried over to spirit money. No longer were people satisfied by burning sheets of paper. They wanted spirit money made with materials that emulated the appearance and texture of actual silver, a preference that remains strong, even today.

Translator: Lewis Wright; editors: Lu Hua and Kilian O’Donnell; portrait artist: Wang Zhenhao.

(Header image: Burning “xibo” (left) and a portrait of Zhu Yuanzhang. VCG)