The economy of the Han dynasty (206 BC – 220 AD) of ancient China experienced upward and downward movements in its economic cycle, periods of economic prosperity and decline. It is normally divided into three periods: Western Han (206 BC – 9 AD), the Xin dynasty (9–23 AD), and Eastern Han (25–220 AD). The Xin regime, established by the former regent Wang Mang, formed a brief interregnum between lengthy periods of Han rule. Following the fall of Wang Mang, the Han capital was moved eastward from Chang'an to Luoyang. In consequence, historians have named the succeeding eras Western Han and Eastern Han respectively.

The Han economy was defined by significant population growth, increasing urbanization, unprecedented growth of industry and trade, and government experimentation with nationalization. Another large component of the government is that it was run by influential families who had the most money. In this era, the levels of minting and circulation of coin currency grew significantly, forming the foundation of a stable monetary system. The Silk Road facilitated the establishment of trade and tributary exchanges with foreign countries across Eurasia, many of which were previously unknown to the people of ancient China. The imperial capitals of both Western Han (Chang'an) and Eastern Han (Luoyang) were among the largest cities in the world at the time, in both population and area. Here, government workshops manufactured furnishings for the palaces of the emperor and produced goods for the common people. The government oversaw the construction of roads and bridges, which facilitated official government business and encouraged commercial growth. Under Han rule, industrialists, wholesalers, and merchants—from minor shopkeepers to wealthy businessmen—could engage in a wide range of enterprises and trade in the domestic, public, and even military spheres.

In the early Han period, rural peasant farmers were largely self-sufficient, but they began to rely heavily upon commercial exchanges with the wealthy landowners of large agricultural estates. Many peasants subsequently fell into debt and were forced to become either hired laborers or rent-paying tenants of the land-owning classes. The Han government continually strove to provide economic aid to poor farmers, who had to compete with powerful and influential nobles, landowners, and merchants. The government tried to limit the power of these wealthy groups through heavy taxation and bureaucratic regulation. Emperor Wu's (r. 141–87 BC) government even nationalized the iron and salt industries; however, these government monopolies were abolished during Eastern Han. Increasing government intervention in the private economy during the late 2nd century BC severely weakened the commercial merchant class. This allowed wealthy landowners to increase their power and to ensure the continuation of an agrarian-dominated economy. The wealthy landlords eventually dominated commercial activities as well, maintaining control over the rural peasants—upon whom the government relied for tax revenues, military manpower, and public works labor. By the 180s AD, economic and political crises had caused the Han government to become heavily decentralized, while the great landowners became increasingly independent and powerful in their communities.

During the Warring States period (403–221 BC), the development of private commerce, new trade routes, handicraft industries, and a money economy led to the growth of new urban centers. These centers were markedly different from the older cities, which had merely served as power bases for the nobility. The use of a standardized, nationwide currency during the Qin dynasty (221–206 BC) facilitated long-distance trade between cities. Many Han cities grew large: the Western Han capital, Chang'an, had approximately 250,000 inhabitants, while the Eastern Han capital, Luoyang, had approximately 500,000 inhabitants. The population of the Han Empire, recorded in the tax census of 2 AD, was 57.6 million people in 12,366,470 households. The majority of commoners who populated the cities lived in extended urban and suburban areas outside the city walls and gatehouses. The total urban area of Western-Han Chang'an—including the extensions outside the walls—was 36 km² (14 sq mi). The total urban area of Eastern-Han Luoyang—including the extensions outside the walls—was 24.5 km² (9.5 sq mi). Both Chang'an and Luoyang had two prominent marketplaces; each market had a two-story government office demarcated by a flag and drum at the top. Market officials were charged with maintaining order, collecting commercial taxes, setting standard commodity prices on a monthly basis, and authorizing contracts between merchants and customers.

During the early Western Han period, founding Emperor Gaozu of Han (r. 202–195 BC) closed government mints in favor of coin currency produced by the private sector. Gaozu's widow Empress Lü Zhi, as grand empress dowager, abolished private minting in 186 BC. She first issued a government-minted bronze coin weighing 5.7 g (0.20 oz), but issued another, weighing 1.5 g (0.053 oz), in 182 BC. The change to the lighter coin caused widespread inflation, so in 175 BC Emperor Wen of Han (r. 180–157 BC) lifted the ban on private minting; private mints were required to mint coins weighing exactly 2.6 g (0.092 oz). Private minting was again abolished in 144 BC during the end of Emperor Jing of Han's (r. 157–141 BC) reign. Despite this, the 2.6 g (0.092 oz) bronze coin was issued by both central and local commandery governments until 120 BC, when for one year it was replaced with a coin weighing 1.9 g (0.067 oz). Other currencies were introduced around this time. Token money notes made of embroidered white deerskin, with a face value of 400,000 coins, were used to collect government revenues. Emperor Wu also introduced three tin-silver alloy coins worth 3,000, 500, and 300 bronze coins, respectively; all of these weighed less than 120 g (4.2 oz).

In 119 BC, the government issued the bronze wushu (五銖) coin weighing 3.2 g (0.11 oz); the coin remained the standard currency in China until the Tang dynasty (618–907 AD). During the brief interruptive Xin dynasty (9–23 AD) of Wang Mang (45 BC – 23 AD), the government introduced several new denominations in 7, 9, 10, and 14 AD. These new units (including bronze knife money, gold, silver, tortoise, and cowry shell currencies) often had a market price unequal to their weight and debased the value of coin currency. Once the widespread civil wars following Wang's overthrow abated, the wushu coin was reintroduced by Emperor Guangwu of Han (r. 25–57 AD) in 40 AD at the instigation of Ma Yuan (14 BC – 49 AD). Since commandery-issued coins were often of inferior quality and lighter weight, the central government closed all commandery mints in 113 BC and granted the central government's Superintendent of Waterways and Parks the exclusive right to mint coins. Although the issue of central government coinage was transferred to the office of the Minister of Finance (one of Nine Ministers of the central government) by the beginning of Eastern Han, the central government's monopoly over the issue of coinage persisted.

Gary Lee Todd (Ph.D. in history from University of Illinois at Urbana-Champaign and Professor of History at Sias International University in Xinzheng, Henan, China) provides the following images of coins issued during the Western Han and Xin periods on his website:

Merchants and peasant farmers paid property and poll taxes in coin cash and land taxes with a portion of their crop yield. Peasants obtained coinage by working as hired laborers for rich landowners, in businesses like breweries or by selling agricultural goods and homemade wares at urban markets. The Han government may have found collecting taxes in coin the easiest method because the transportation of taxed goods would have been unnecessary.