[Part 8 Socio-Political Economy] China Governance History
Richard von Glahn’s Economic History of China, chronological conclusions
Richard von Glahn wrote:
CHAPTER 1
The Bronze Age economy (1045 to 707 BCE)
… Conclusion
In the Western Zhou, the king, the archer lords, and royal officers all drew revenues from lands which they possessed as the common patrimony of their lineage. The concept of taxation did not yet exist. The Western Zhou thus can be categorized as a type of domain state in which the wealth and income of the ruling class derived from personal and familial rights to land and labor rather than the perquisites of office. But over the course of the Western Zhou period royal authority became increasingly circumscribed. From the outset the Zhou kings had ceded control of the territories and populations of the old Shang heartland on the Central Plain to the archer lords. Within the royal domain in the west, the award of land grants to royal officials progressively diminished the monarchy’s direct control over land, labor, and other resources. Nonetheless, the Zhou kings continued to exert considerable influence over the royal domain, at least indirectly. The Zhou government developed a more formal bureaucratic structure and exercised effective juridical authority, as the central role of royal officials in arbitrating disputes between aristocratic lineages demonstrates.
The emergence of the Royal Household as an autonomous branch of the royal government perhaps enhanced the personal power of the king, but over an increasingly smaller dominion. At the same time the attrition of royal power was accompanied by growing instability within the ranks of aristocratic lineages. The patrimonial order of the Zhou aristocracy had been founded on lineage solidarity and the ancestral cult. Over time, kinship bonds loosened as genealogical connections became more distant. The fragmentation and dispersal of landholdings also contributed to social and economic differentiation within aristocratic lineages. Among both aristocrats and commoners alike, social identity increasingly focused on the territorial community – the settlement (yi).
After the debacle of 771 BCE and the loss of their homeland, the Zhou kings slid toward irrelevance, the titular figureheads of a defunct political order. Military and economic power devolved to the archer lords, now fully independent of royal control. We know little about the activities of the archer lords during the Western Zhou period, but they take center stage in the Eastern Zhou. Although the archer lords emulated some features of late Western Zhou royal government, a new type of polity – the city-state – dominated the political, social, and economic landscape of the Spring and Autumn era. The city-state was engendered by a reorganization of the Zhou patrimonial order that removed the king from the apex of power. But the city-states also fostered political, military, and economic forces that would hasten the final demise of the patrimonial state.
CHAPTER 2
From city-state to autocratic monarchy (707 to 250 BCE)
… Conclusion
The patrimonial state of the Western Zhou rested on a ritual order in which the king bestowed rank, office, and wealth according to kinship status and service to the royal house. As royal authority ebbed, regional domains asserted their independence from the Zhou kings, a trend already well underway before the fall of the Western Zhou in 771 BCE. Nonetheless, aristocratic status, kinship hierarchy, and ritual protocol continued to define the social order of the emerging city-state polities of the early Spring and Autumn era. Indeed, the culture of the ruling elite became increasingly homogeneous throughout the expanding Zhou ecumene during this period. But the constant warfare of the Spring and Autumn world unleashed new forces – including the militarization of society, the rise of the citizenry, and the devolution of power from hereditary rulers to their ministers and generals – that engulfed the lineage-based polities in perpetual internecine conflict. In the long-run, this endemic disorder spawned more centralized and bureaucratic regimes that absorbed many defunct city-states into expanding territorial states.
From c. 600 BCE, the centralization of power in the hands of powerful monarchies and the progress of territorial consolidation dramatically reshaped the economic and social structure of the Zhou ecumene. The Iron Age revolution had an equally convulsive impact on the social order. Iron metallurgy transformed the technologies of both destruction and production, further accelerating the centralization of state power. The rise of the autocratic state in the Warring States period was driven by the mobilization of men and materiel for war, which in turn required new techniques of political, economic, and legal control that fostered a direct relationship between the state and its subjects. These policies established the family farm as the mainstay of agricultural production and the conjugal household as the fundamental social unit that supplied revenues, conscript labor, and military recruits to the state. Agricultural production surged, and increasing numbers of people were employed in mining, logging, craft production, and transportation. Mass production in government-managed workshops supplied not only the state but also urban consumers with a wide range of goods. At the same time long-distance trade flourished, abetted by regional specialization of production, the emergence of an independent merchant class, and the introduction of bronze currency. Material wealth and political office superseded descent and rank as the basis for social distinction. Although Confucian traditionalists bemoaned the demise of the patrimonial state, already by the time of Mencius in the fourth century BCE a new calculus of economic livelihood – the fiscal state – had eclipsed the domainal regimes of the Spring and Autumn city-states. The ruler exercised unprecedented authority to extract economic resources in the name of the commonwealth. Yet he was also obliged to balance his determination to enhance the wealth and power of the state with the subsistence needs of his subjects.
By the late Warring States period, two distinctive patterns of economic development had emerged. In the thickly settled heartland of the North China Plain, central government authority weakened after the division of Jin into the three separate states of Wei, Hann, and Zhao in 453 BCE. In this region local cities and their merchant and artisan classes enjoyed considerable autonomy from their royal overlords. Private entrepreneurship stimulated industrial and commercial expansion. In the peripheral states of Qin, Chu, Qi, and Yan, by contrast, autocratic rulers established the bureaucratic institutions to control economic resources that became the hallmarks of the fiscal state. In these states industrial production was concentrated in state-managed workshops and officials exercised much tighter control over trade. The latter pattern of strong state control of the economy would prevail after the formation of a unified empire under the Qin in 221 BCE.
CHAPTER 3
Economic foundations of the universal empire (250 to 81 BCE)
… Conclusion
The Qin and Han empires presided over a crucial transition from military conquest to bureaucratic rule. The dynastic founders were dedicated to the idea that the enlightened ruler provides for the common welfare through interventions to promote agricultural production and facilitate the circulation of goods. The mingtianzhai system of land grants originally derived from the Qin model of a militarized society in which rank was based on accomplishments in war. The Han sought to foster a new meritocracy based more on civic virtue than military valor. But Emperor Wen’s laissez-faire policies, coupled with the growing dominance of the rentier nobility, undermined the static economic order on which the mingtianzhai landholding system was premised. Merchants reaped new fortunes – especially in the Central Plain cities that had been the commercial heartland of the Warring States era – while landownership became increasingly concentrated in the hands of powerful lineages. Ultimately the shift from military rule to bureaucratic governance resulted in the formation of a new ruling class based on political office, noble rank, and landholding.
The imperial state’s capacity to regulate the economy was closely tied to its ability to provide public goods and tax economic activity. The Qin Empire epitomized a command economy in which the state owned non-agricultural productive resources, managed much industrial manufacturing (using mostly unfree labor), and tightly supervised markets. The Legalist model of the military-physiocratic fiscal state focused more on mobilizing labor power than on collecting the fruits of labor. The value extracted by the state in the form of labor conscription was significantly greater than the burden of taxes on arable land. The Qin issued currency in the form of bronze coin less to facilitate market exchange than to provide an efficient means of collecting revenue as well as paying and provisioning its armies. As the Qin state expanded, culminating in the formation of a unified empire in 221 BCE, the problem of imposing the state’s will on the thriving merchant classes of Chu and the Jin successor states of the Central Plain grew more acute. Under the empire, the Qin leaders adopted punitive measures intended to curb what they regarded as profiteering by merchants.
The Han founder, Liu Bang, initially retained many features of Qin fiscal policy, including the discrimination against merchants and the heavy reliance on conscript labor service. But apart from craft industries – in which the state continued to play a leading role – the Han withdrew from direct administration of the economy. Like the Qin, the Han state deemed the conjugal household the primary unit of economic production and assessed uniform taxes in money and labor service on all able-bodied adults. But as socio-economic inequality worsened and many farming families lost their independent means of livelihood, this presumption of parity became meaningless.
The exorbitant costs of foreign wars and imperial conquests in the remote frontiers of Inner Asia, Korea, and Vietnam propelled Emperor Wu to reverse the laissez-faire policies of his predecessors and embark on an audacious strategy of state usurpation of industry and commerce. But Wu’s mercantilist policies also reflected a desire to rectify growing economic inequality. The failure of Wu’s efforts to control the commercial economy and put fiscal administration on more sound footing presaged a withdrawal of the state from direct control of the economy under his successors, even though the salt and iron monopolies were retained. As the state’s economic leverage diminished, the stratification of private wealth intensified.
Moreover, rather than reversing the trend toward the concentration of wealth, Wu’s policies ironically had reinforced it. Heavy-handed efforts to extract revenue from the wealthy through measures such as the suanmin levy did not lead to the demise of the great landowners. On the contrary, the brunt of these exactions was borne by households of modest wealth. Farming families found it increasingly difficult to maintain their independence, and many fell into ruinous debt and were forced to sell off their lands. The mingtianzhai system of land allocations disappeared. As the economic polarization between rich and poor widened, the original Han fiscal system – premised on a basic equality of labor and land among farming households – proved increasingly unworkable. The resort to indirect taxation favored by Wu’s advisors became increasingly indispensable to the state’s fiscal solvency. Eventually the Han would abandon the principles of equity and universality that had been hallmarks of state-building since the Warring States era.
CHAPTER 4
Magnate society and the estate economy (81 BCE to 485 CE)
… Conclusion
Following the long and tumultuous reign of the Han emperor Wu, the Qin-Han imperial order steadily eroded. Ironically, privileges granted by the state to its officials became the foundation of the new manorial order that concentrated wealth and power in the hands of magnate landowners. This privatization of power intensified in the final decades of the Eastern Han, and especially during the ensuing Period of Disunion. Magnates assumed leadership of local communities and responsibility for public security and social welfare. The rise of the manorial economy was accompanied by a shift in population and economic activity from the cities to the countryside, a trend perhaps encouraged by the Han state’s punitive measures aimed at wealthy merchants. But the retreat from state regulation of commerce in the Eastern Han allowed greater scope for local magnates to flex their muscles in the marketplace. Economic domination by the magnate clans reached its peak in the century after the sack of Luoyang in 311 and the flight of the Jin court to Jiangnan.
As the Zoumalou manuscripts show, to the very end of the Han the imperial state retained substantial capability to extend its reach into local society. But the Zoumalou population registers also reveal concerted resistance to the state’s demands, especially military conscription. In the post-Han era rulers repeatedly attempted to reestablish a stable revenue base – —through the tuntian farmer-soldier colonies created by Cao Cao and the rulers of the Three Kingdoms; the zhantian ketian taxation system of the Jin; and the fiscal reforms enacted by the founder of Liang in the early sixth century. But these efforts failed to loosen the magnates’ control over land and labor, and often were subverted by the rulers’ own self-enrichment.
Already in the Eastern Han deepening economic inequality forced the state to retreat from the principle of uniform taxation of all subjects. Instead, beleaguered officials adopted new expedients to base taxation on the actual wealth of households. In addition, the collection of revenues in coin was gradually replaced by payments in cloth and grain. But this shift to in-kind taxation did not portend the disappearance of the money economy, as often has been supposed. Coin was indispensable to private trade, and the demand for money intensified with the growing prosperity of the southern dynasties in the fifth and sixth centuries.
This renewed economic vigor resulted from the rise of the Jiangnan region as the heartland of the southern regimes. Few of the benefits of this resurgence accrued to the state, however. Magnate landowners spearheaded the development of rice agriculture in the south, laying claim to wilderness lands and mobilizing the labor needed to bring them under cultivation. Private clientage remained the mainstay of the manorial order that flourished under the southern dynasties.
Commercial vitality enabled the southern courts once again to collect a significant share of taxes in coin. But the renewed importance of coin in state finances should not be taken as a sign of a sturdy fiscal system. Instead, it reflected the desperate straits of regimes beset by soaring military costs in the face of mounting pressure from the powerful Northern Wei state in the north. The census conducted by the Song in 464 counted only 907,000 households and fewer than five million people (less than half the population for South China in the Han census of 140 CE), a telling indication of the state’s feeble control over labor and resources. Instead, it was the foreign-ruled Northern Wei state that would develop the new institutions to build the formidable military machine that made possible the reunification of China in the late sixth century.
CHAPTER 5
The Chinese-nomad synthesis and the reunification of the empire (485 to 755)
… Conclusion
By the sixth century, the economic landscape of China had changed radically compared to Qin-Han times. None of the states of the Period of Disunion could wield the kind of control over the economy exerted by the Qin and early Han empires. Despite efforts, most notably by the Northern Wei, to assert the state’s prerogatives over the allocation of lands, the concentration of landholdings in the hands of aristocratic families endured. The gulf between rich and poor widened along with the growing social and legal distinctions between aristocrats and commoners. Buddhism emerged as a powerful economic force. The major Buddhist monasteries – whose clergy were mostly drawn from the ranks of the aristocracy – became great landowners in their own right and exercised considerable influence on economic activities ranging from money-lending to handicraft production. Most significantly, South China’s share of the national economy grew substantially during this era. Although the majority of China’s population still resided in the traditional heartland of the Yellow River valley, a momentous shift had occurred that ultimately would lead to a recentering of the Chinese economy on the rice-growing regions of the south, especially the Jiangnan region in the Yangzi River Delta.
The founding of the Tang dynasty by Li Yuan in 618 in some respects was merely the culmination of a series of coups-d’état among leading figures of the hybrid Chinese-Xianbei aristocracy that had ruled the succession of short-lived dynasties since the fall of the Northern Wei. But the Tang dynasty would endure for nearly three centuries. During its first century the Tang dynasty presided over a peaceful and prosperous empire at home while exercising political and cultural influence on its neighbors far surpassing that of even the Han dynasty. Heirs to the traditions of the steppe as well as China, the Tang imperial house cultivated a cosmopolitan vision of empire that encouraged an unprecedented growth of foreign trade. The Tang capital of Chang’an was the largest city in the world, boasting perhaps more than one million residents. The outbreak of the devastating An Lushan rebellion in 755 brought a swift end to the golden age of Tang, however. While the dynasty survived the ensuing eight years of civil war, the rebellion crippled the central government and forced a fundamental transformation of its political and economic institutions. The An Lushan rebellion thus marked a momentous new departure in the evolution of the Chinese economy, as well as in Chinese political institutions, intellectual traditions, and social life.
CHAPTER 6
Economic transformation in the Tang-Song transition (755 to 1127)
… Conclusion
The Tang-Song transition engendered far-reaching institutional changes in both the public and private sectors that transformed the economy and the state. More competitive factor markets for land, labor, and capital, new productive resources, and rising public and private demand provided the impetus for sustained economic growth. Nearly universal private landownership, monetization of tax payments, and the release of most of the population from statutory labor obligations fostered a more rational allocation of economic resources. Growth in the money supply and the proliferation of both public and private financial intermediation lubricated trade and investment. Marked increases in the output of staple foods, textiles, shipbuilding, and metallurgy resulted not so much from new knowledge but rather the application of existing technologies on a much wider scale, and especially the transfer of these technologies to the far richer resource base of South China. The great leap forward in food production made possible by the shift to wet-rice agriculture, rising consumption of new comestibles such as tea and sugar, and vigorous demand from the shipbuilding, paper, printing, and lacquer industries for the products of South China’s ample forests all contributed to commercial growth, rising incomes, and the diversification of consumer demand. Market expansion fostered regional specialization, especially for high-quality silks, porcelain, paper, lacquer wares, and tea, but also for cheaper versions of these goods intended for mass consumption.
The relationship of the state to the private economy changed as well. The weakening of state control over land and labor in the aftermath of the An Lushan rebellion compelled the Tang court to resort to indirect taxation, especially consumption taxes, in a desperate effort to boost revenues. This trend accelerated during the tenth century, after the final collapse of the Tang dynasty. Warfare among rival regimes, especially in South China, promoted mercantilist fiscal and monetary strategies for strengthening state power. The Song dynasty restored firm state control over the population and resources, but from the beginning the Song also faced dire threats to its existence from strong nomad-based states on its northern frontiers. The Song leadership chose to continue to rely chiefly on indirect taxation of commerce to meet the escalating costs of provisioning massive standing armies of professional soldiers. State income from land taxes remained static throughout the eleventh century, even as the population tripled and registered lands increased by 50 percent. The New Policies enacted by Wang Anshi and his followers were dedicated to the twin goals of capturing greater revenues from an expanding commercial economy and alleviating the economic inequality that commercialization entailed. Despite some promising initial achievements, in the long run the New Policies failed to achieve durable success in meeting either of these objectives.
Notwithstanding the repeal of the New Policies in the Southern Song period, the reconstruction of the imperial state during the Tang-Song transition marked a dramatic departure from the original conception of the military-physiocratic state formulated under the Qin-Han empires. At times – during the tenth century interregnum, and again under the New Policies regime – state fiscal policy revived the mercantilist principles of Pseudo-Guanzi and the interventionist policies devised by Emperor Wu of Han’s coterie of advisors. Like Sang Hongyang, Wang Anshi and his acolytes were charged with the odious sin of fiscalism, of wielding state power to usurp the wealth of the people for their own power-mongering ends. But the fundamental feature of the military-physiocratic fiscal state, the presumption of economic equality established through state land allocations and ratified by uniform taxation and conscription imposed on all adults, was irreparably defunct. Landownership had become thoroughly privatized, and the principle of progressive taxation embedded in the twice-a-year tax system conceded to the reality of sizable disparities in land and wealth. Song fiscal administration adhered to some of the interventionist policies of Emperor Wu’s mercantilist regime, such as the state monopoly on trade in salt and Wang Anshi’s State Trade Bureau, modeled after Sang Hongyang’s “balanced standard” system.
But, in contrast to the Qin-Han states, the Song revenue system relied heavily on indirect taxation, and its fiscal policies for the most part sought to harness market forces rather than suppress them. Thus the ruzhong policy offered merchants incentives to deliver provisions to frontier armies in lieu of an inefficient state-run procurement and transportation system. A significant share of the profitability of the salt monopoly derived from the utility of salt certificates as negotiable financial instruments in the private economy. The lucrative liquor monopoly – further evidence of the central place of consumption taxes in the Song fiscal regime – combined state-run breweries with franchising of brewing and sales rights in places where small economies of scale favored private entrepreneurship over government operations. This legacy of maximizing revenues in concert with market growth continued to prevail during the Southern Song, when the dynasty faced equally dire challenges to its survival.
CHAPTER 7
The heyday of the Jiangnan economy (1127 to 1550)
… Conclusion
The commercial efflorescence of the Southern Song period touched virtually all quarters of Chinese society. Farming families produced their own staple foods, but many items of daily consumption were obtained through market exchange. Monetization of taxes and the procurement of military supplies through market mechanisms became even more pronounced in the Southern Song compared to the New Policies era. Unable to sustain the massive output of bronze coin achieved in the eleventh century, the Southern Song state still managed to maintain flexibility in the money supply through new paper currencies and increasing resort to silver as a monetary medium. A panoply of institutional innovations in financial services – including commercial brokers, credit financing, bills of exchange, advance sale contracts, commenda partnerships, and joint-capital enterprises – facilitated the expansion of interregional and overseas trade. Apart from seaport regions such as Quanzhou, dynamic growth fostered by cross-sectoral integration was most evident in Jiangnan, which solidified its stature as the center of gravity in the Chinese economy.
The Jurchen and Mongol conquests inflicted heavy blows on the economy of North China. In contrast, Jiangnan continued to prosper under Mongol-Yuan rule. The onerous demands for tribute that the Mongols imposed on the former Jin territories in North China were ameliorated after Qubilai’s conquest of the Southern Song. The great landowners of Jiangnan attained extraordinary strength during the Yuan, thanks to the Mongol court’s lax attitude toward the concentration of private wealth, its avid encouragement of domestic and foreign commerce, and its reliance on tax farmers for revenue collection. But a sharp reversal set in after the founding of the Ming dynasty. The first Ming emperor, Hongwu, spurned not only the Mongol heritage and the extreme inequities in wealth and landownership that had festered under Yuan rule, but also the very premises of the market economy. Hongwu’s program of social reform envisioned restoring a simple, village-based agrarian society unbesmirched by venality, ostentation, and exploitation. His fiscal strategies, such as his attempt to create a purely fiat paper currency, were motivated by a desire to replace the market with a command economy subservient to imperial will. Along with his draconian expropriation of the landholdings of the Jiangnan elite, Hongwu’s policies had a stifling effect on Jiangnan’s market economy, a setback that took more than a century to overcome.
CHAPTER 8
The maturation of the market economy (1550 to 1800)
… Conclusion
By the sixteenth century, long-lasting domestic peace and stability had engendered rising agricultural production and a revival of trade. From 1550, the pace of commercial expansion quickened. Expanding international markets for Chinese silks and porcelains stimulated industrial production, and the massive inflow of Japanese and New World silver lubricated the wheels of commerce. Urban growth was most conspicuous in the flourishing Jiangnan cities of Suzhou, Hangzhou, and Nanjing, whose inhabitants engaged in hundreds of artisanal crafts to sate the swelling hunger for luxury goods and new consumer staples. The gravitational pull of these great cities radiated throughout the Jiangnan countryside, where hundreds of satellite market towns emerged that linked rural industries – chiefly, but not exclusively, textiles – to urban markets both near and far. In the eyes of contemporary patricians, the growth of cities and towns, and the wealth that accumulated in them, bode ill for public morality and social order. “In my father’s day,” wrote Ma Yilong (1499–1571) in the preface to his treatise on husbandry, “people subsisted on the fruits of their own labor, and tradesmen and shopkeepers were spread across the countryside … Nowadays people live off the toil of others, and rural inhabitants have flocked to the towns and marketplaces, scurrying to and fro without stable employment, palms open and tongues jabbering, resorting to any chicanery to sell their wares”. The insinuation of money into all spheres of social life indeed would have profound cultural as well as economic repercussions. The military and political crises that ushered in the abrupt collapse of the Ming dynasty in 1644 and the Manchu conquest of China dealt only a short-term setback to the economic forces unleashed during the last century of the Ming, which continued to prevail well into the nineteenth century.
The maturation of the market economy was the signal feature of the economic history of the late imperial era. Long-distance trade networks extended to every corner of the empire, even though the circulation of commodities bypassed large swaths of rural China. The growth of long-distance trade was made possible by the development of a wide range of institutional innovations, including lineage trusts, native-place networks and trade specialization, joint-share partnerships, and linked-firm enterprises. In contrast to the Song period, when state procurement was a key catalyst in the creation and articulation of long-distance trade networks, private enterprise was the dynamic force fostering market growth in the late imperial era. Unfettered development of private commerce promoted a pattern of “Smithian growth” in which greater economic efficiency was achieved through market expansion and specialization of labor.
By the same token, the fiscal role of the state diminished compared to the Song dynasty. The commutation of taxes to silver payments and the elimination of nearly all labor service duties in the early Qing period reduced the relationship between the state and the household to a monetary transaction. But the Qing state, like the Ming before it, remained dedicated to the Confucian principle of minimal taxation, which constricted its capacity to make infrastructural investments or provide public welfare. The aggressive state activism promoted by the Yongzheng Emperor in the 1720s–30s receded under his successor Qianlong, who favored benign laissez-faire policies. Even if they had the will to do so, Qing leaders lacked the fiscal resources to stimulate economic development.
Beginning in the late seventeenth century, China underwent a surge in demographic growth – a tripling of the population between 1680 and 1850 – virtually unprecedented in the history of the premodern world. This remarkable demographic expansion was propelled by prolonged domestic peace and a sustained rise in economic output made possible by the efficiency of markets, regional specialization of production, and an expanding money supply.
Yet the prosperity engendered by the quantitative growth in output masked the lack of significant innovation in productive technologies that would have lessened the pressure on increasingly scarce resources – land, water, food, and energy. Even contemporary Chinese statesmen were alarmed by the rapid pace of population growth and the mounting pressures on the agricultural base of the economy. The outbreak of the White Lotus rebellion in western China in 1796 not only shattered domestic tranquility but also starkly exposed the state’s unpreparedness to subdue civil disorder. In the following decades the Chinese economy tumbled into a lengthy economic depression that would fan the flames of social discontent. At the same time Qing sovereignty came under siege by industrializing Western powers seeking to throw open Chinese markets.
CHAPTER 9
Domestic crises and global challenges: restructuring the economy (1800 to 1900)
… Conclusion
China’s defeats in the Opium Wars compromised the imperial court’s sovereign powers, and the devastation wrought by the mid-century rebellions undermined its sway over the economy. The Qing fiscal system – rooted in the Confucian ideals of supporting agriculture as the economic base of society, minimal taxation, and an unwavering commitment on the part of the state to protect and preserve the people’s livelihood – was shattered. Under the rubric of “self-strengthening”, the Qing government adopted a new model of political economy, enlarging its revenues by shifting from direct to indirect taxation and investing in enterprises such as arsenals, steamships, mines, and telegraph services requiring imported technologies.
But these initiatives failed to harness private entrepreneurship or to develop the managerial skills necessary to put them on a sound financial footing. Provincial and local authorities frequently imposed arbitrary and often exploitative exactions, further weakening the fiscal foundations of the empire. New tensions emerged between the imperial government and local elites who saw their interests as increasingly detached from those of the Qing dynasty. The failure of the Qing modernization efforts was painfully revealed in China’s humiliating defeat in its war against Japan in 1894–95.
The debacle of the Sino-Japanese War finally prompted fundamental change in economic policy. The Treaty of Shimonoseki of 1895 granted foreign firms rights to operate manufacturing ventures in the thirty-plus treaty ports and to form joint ventures to invest in railroad construction. For the first time foreign capital and mechanized industry began to exert a significant impact on the Chinese economy. The treaty also saddled the Qing court with an enormous indemnity, which forced the state to seek private financing and foreign loans to service its debt. Serious contemplation of substantive political change inspired a movement for political reform that temporarily won imperial endorsement in 1898, but proved abortive. The Boxer rebellion fiasco of 1900, in contrast, made reform imperative.
During the first decade of the twentieth century tentative steps were taken toward reinventing the Qing empire as a constitutional monarchy and grafting new institutions of public finance, commercial law, banks, and schools borrowed from the West onto a revamped bureaucracy. But the new economy that began to emerge at the close of the nineteenth century only hastened the final collapse of the empire in 1911.
China’s gradual incorporation into an increasingly globalized economy created both challenges and opportunities. Foreign trade, which rose dramatically after 1860, was a crucial catalyst for change. China’s share of world merchandise exports was twice as great as that of Japan in 1913, and still 50 percent greater in 1929 (although in per capita terms China’s share was far lower). By the 1880s, more than half of total silk output was exported. The terms of trade (measured in import and export prices) also improved by 25 percent in China’s favor between 1870 and 1913. But the economic changes set in motion by new commercial and industrial forces exacerbated existing regional inequalities. Coastal regions fared better than the interior. Hinterland areas increasingly fell behind the coastal areas in real incomes and social welfare. The state’s capacity to transfer resources from richer to poorer areas – long a staple feature of the imperial political economy and a crucial fulcrum of social stability – waned. Ecological fragility, already evident in 1800, precipitated natural disasters that escalated into profound human tragedies, such as the devastating North China famine of 1876–79, which claimed ten million or more lives.
By many measures, China achieved impressive economic growth in the early decades of the twentieth century. Yet the pace of economic change appeared to be more dramatic than actually was the case. The phenomenal transformation of Shanghai, where 40 percent of China’s modern industry was located in 1933, masked the more gradual and uneven degree of economic development elsewhere. Modern industry grew rapidly, at a rate of more than 8 percent per year between 1912 and 1936, but still accounted for only 2.5 percent of GDP in 1933, while handicraft industries held steady at 7.5 percent of GDP throughout this period. Although exports increased nearly five-fold between 1870 and 1929, China’s share of global merchandise exports remained constant at 2 percent. The extractive power of the state – now fractured into regional warlord regimes, a debilitated national government, and increasingly autonomous local powerholders – increased, thanks in large part to modern transport and weaponry. Yet China’s new political leaders provided little in the way of services, public investment, or social welfare. Local governments and economic elites exercised greater influence on economic development than the national state. The permeability of a region to new product, currency, and credit markets also was often determined by local interest groups.
But the inability to fulfill traditional commitments to welfare or to ameliorate the economic reversals and distress that afflicted China during these turbulent years of unremitting warfare, social turmoil, and ultimately global depression vitiated the legitimacy of China’s rulers. In the wake of this failure to refashion political economy to meet the demands of the modern era, political authority was ceded to the upstart Communist leaders who would launch China onto a path of radical economic experimentation. [END]
The Source:
Richard von Glahn, An Economic History of China: From Antiquity to the Nineteenth Century, Cambridge 2016 [the extracts here are the ‘Conclusions’ of Chapters 1-9]
Evolutions of social order from the earliest humans to the present day and future machine age.