The early 80s, were of course turbulent time in China, with Deng Xiaoping trying to hang onto Power and internal conflicts arises between his capitalistic open-door economy against the old communist doctrine of central plan economy.

Expatriates arriving in China during the 80s (me included) all told that RMB is not the currency foreigners could use in China. From early 80s to mid-90s, China experimented a two-tier currency system, with foreigners having to buy Foreign Exchange Certificates (FECs) at 3.5 FEC to 1 USD, while the official rate of RMB to USD was 7:1. As a foreigner, we were forbidden to possess RMB, which were restricted only for use by mainland Chinese national. Throughout the 80’s, the black- market exchange rate for RMB was well below 10 RMB to 1 USD.

Within all the strategic reasons in partitioning the Chinese economy, this elaborate system, which was employed countrywide, created the characteristic of restricting the movements of foreigners in China.

One of the fascinating experiences in China during the era would be the special “Friendship Stores” and specifically designated hotels which could accept FECs. It therefore meant foreign visitors and businesspeople were restricted to where they could stay and where they could shop.

Indeed, shopping in the Friendship Stores was something of an experience. Such stores stocked purely “imported luxury” goods, which were reserved only for foreigners, and only foreigners were allowed in the Friendship Stores to buy imported products. Chinese were barred from entry. In the Friendship Stores (few of which remain today) the back shelf displayed the luxury goods. They were generally, Johnnie Walker Red Label whisky, Marlboro cigarettes and a few expensive Chinese silk paintings. That was about it. Dining out was also restricted to the hotel, where food was usually unexciting and expensive. Only foreigners were allowed to dine in them, and contact with local Chinese was purposefully minimized in this way.

In practice however, this economic partition created a huge black market for FECs. Foreigners, fed up with the limited options available with their FECs, wanted to have RMB and to be able to use them in regular Chinese restaurants and shops, even though it was illegal to possess RMB, the black market thrived.

The Chinese too, wanted FECs so that they could buy the “luxury” goods – a bottle of Johnnie Walker red label and a packet of Marlboro cigarettes was highly prestigious at the time. It was common sight to see Chinese men on the street furtively whisper “Change FEC?” as foreigners walked past. You would do the deal in a side doorway using the black-market rate was far better than the Bank of China’s rate of 3.5FECs to 1 USD. Clutching illegal RMBs in hand, it smelt of danger and excitement., but you had now a pass, even if illicit, to a world of real Chinese restaurants, shops, and purchases.

Still though, it was not always easy. Many prejudices and fears about foreigners remained common in China. Many Chinese restaurant or shop owners refused foreigners to enter. If they did not have the right license, it was illegal for them to allow foreigners into the premises.

More control existed throughout the country. During my times, I a Canadian Chinese expatriate was refused entry to local restaurants. On one occasion, the elderly woman directly pointed at me as I entered her small dumpling restaurant and said, “No admittance to foreign devils!” Her son said, “But Mother, he looks Chinese, and he has money.” Turning to him as she held open the door for me to leave, she said, “I do not care. He is still a foreign capitalist!”

FECs were finally phased out in 1995 and the remaining FECs were exchangeable, at the Bank of China, for a period of six months at face value to RMB.

Although this is now ancient, FECs served as an unforgettable “memorabilia” for the millions of early China traders, who had endured Friendship Stores, unfriendly and unwelcome services from government workers, discrimination, and prejudices from the locals and unexcited, rip-offs and horrifying restaurant experience and unspeakable poor hygienic environment at the state owned 5 stars hotels.