(Xinhua)
Updated: 2007-11-24 16:55

原标题Small change shortage a big problem in southern, urban China
BEIJING, November 24 (Xinhua) -- Generations of Chinese children have been taught to practice thrift by putting their pocket change into piggy banks.

However, many continue the habit as adults, which -- combined with rising prices in China's richer regions -- has caused severe shortages of coins and small-denomination notes.

In hundreds of millions of these home banks, Chinese are hoarding a big percentage of the nation's small change. As a result, stores, peddlers, restaurants and even banks are short of coins, according to a southern Chinese weekly newspaper report published on Saturday.

The shortages are particularly severe in the more prosperous cities of southern China, where prices have been rising fast, the newspaper reported.

The shortages have given rise to an underground trade of "professional exchangers" who supply coins and low-denomination notes, at a commission of about 2 percent.

But with the shortages worsening, especially in the booming southern province of Guangzhou, the unofficial price of 100 one-yuan coins can be as high as 125 yuan, according to the report in the Workers' Daily.

"For the convenience of customers, we have to buy small change from the dealers, even though commissions are increasingly high," said a peddler.

There are similar shortages in the coastal province of Shandong. There,according to official statistics, the central bank has issued coins worth 40 million yuan (5.26 million U.S. dollars) since 2006. Most of these have vanished from circulation.

Meanwhile, a veritable mountain of small change from bus passengers is collected every day by public transport companies, which then send most of it to the bank, the newspaper said.

But supplying coins has become a side business for bus lines, which supply amounts ranging from 3,000 to 5,000 yuan (395 U.S. dollars to 658 U.S. dollars) to small businesses ranging from lottery vendors to restaurant operators. The bus companies charge "reasonable fees" to cover the cost of "manual currency counting", the newspaper said.

WHERE ON EARTH ARE ALL THE COINS?

People find it increasingly inconvenient to discover that their 100-yuan notes are useless when it comes to buying vegetables, taking buses or using public phones -- small transactions that require small change.

A bank clerk in Guangzhou told the newspaper that the small-change shortage is an annual phenomenon that worsens at year-end. That is because the People's Bank of China (PBOC), the central bank, usually issues coins to commercial banks at the start of each year. By the end of the year, most have disappeared into the piggy banks of the nation.

A PBOC source told the newspaper that "the structure of the country's currency issuance is reasonable and the issue amount is adequate, but 60 to 70 percent of small-denomination money is being held by the public."

The source said saving boxes had become a must-have in every Chinese household. Soaring prices have also worsened the small change shortage, because people seldom use currencies under one-yuan.

The issue of one-yuan coins and notes cannot solve the problem without the help of the 0.5-yuan, 0.1-yuan or even smaller denominations.