Chinese economic history has a long background. The economy comes from pre-history to written Chinese characters.
Nomadic people do not have much need for planning in an economy. They barter.
Settled people like the Chinese had a need for a more planned economy. They need copper coins and trade outside their borders. Urban centers are more suited to the development of trade.
The aristocracies also became more wealthy, and had more desire to increase their variety of goods.
According to the lecture notes of March 21 changes were taking place from 618 to 1050.
City and government planning became less centralized.
Two cities were important capitals of the Chinese during this period.
1. The Tang capital of Changan (Xian) retains its original layout. The Western Market had a sizeable foreign population with many Syrians and Persians (p205).
Merchants in the walled city lived in close quarters with each other.
2. Kaifeng produced swords, armor, tools, nails and musical instruments in 1078 (p264) under the Song dynasty.
The planned capital of the Tang became less important than the commercial capital Kaifeng. The Jin capital at Kaifeng fell to the Mongols in 1234.
The Qin dynasty organized massive public works, such as roads, canals and massive walls (p104).
The people in power changed from the aristocracies to the scholar - officials.
The Salt and Iron Debates.
The Han Dynasty established the Iron and Salt monopolies in 119 B.C. under Emperor Wu. It was able to charge artificially high prices from products over which it had monopolies (p130)
The profits generated from the monopolies provided an important source of revenues for the central government. After Emperor WU's death sixty Confucian scholars severely criticized the creation of the monopolies. The learned men said "trade promoted dishonesty"
The debates proved the extensive trade had with outsiders. The monopolies provided an important source of revenue for the central government in subsequent dynasties.
After The An Lushan rebellion the Tang found the salt monopoly could produce the most revenue for the least manpower. As long as the state maintained direct control over the production, it could buy all produced and sell to to the merchants. The people could then buy the salt from the merchants who were responsible for collecting and paying the salt tax.
In 779 the salt monopoly produces half the central governments revenues.
The world's first paper money was printed in Sichuan (p270) to facilitate long distance trade transactions in the 10th century.
In the 11th century the central government granted sixteen merchants houses a monopoly on promissory notes. When merchants failed to pay the value of the notes the central government took over.
Wang Ashi - New Policies (p271)
He suggested that government employees should be paid in cash salaries, instead of pay in kind.
Green Sprouts program. Used grain from granaries to lend to the farmers. These loans were supplemented by the Green Sprouts loans. When interest was charged for the loan, the peasants defaulted.
Sima Guang thought that there was insufficient coins in circulation for the farmers to pay back their loans. The price of money was artificially high. Peasants had to trade too much grain to get cash to repay the state.
The collapse of the Green Sprout loans allowed the wealthy moneylenders and big landlords to dominate the countryside.
The new emperor retracted the policies. Another emperor, Huizong, reinstituted the New Policies. These changes had little effect to dilute the power of the local clans.
Early China used Confucian principals. Later the foreign Buddhist religion was adopted. This religion was more suited to merchandizing. Donations to make and sustain Buddhist temples had to come from trade. The donated revenue from trade, paid for by the wealthy aristocrats, helped maintain the religion. The religion encouraged trade. Moral guidance was provided by the monks.
Neo-Confucianism replaced Buddhism under later Emperors. China became more dependent upon internal development, although trade never disappeared.
Second Commercial Revolution of the Ming Dynasty.
Under the Yongle emperor, the government began to mine silver.(Hanson p404-407). The world's largest economy in the 16th century needed trade in new world silver. The ban on trade was ignored. Smuggling occurred. Chinese merchants trades tea, porcelain and silk for it. New World silver transformed the Chinese economy, although the government never acknowledged the fact. The tax was still assessed on how many able-bodied were in the household and on the basis of land holdins. Because of the lack of reliable data, comparisons with the first commercialization under the Tang dynasty is difficult.
Many households began to produce products for the expanding market under the Song dynasty and to purchace foodstuffs at markets rather than growing it themselves. In succeeding centuries market networks extended into smaller cities and coutryside producers. However subsistance farming still persists in the poorest regions of modern China.
During the second commercial revolution of the Ming period, the market grew. The size of the landholding declined and the population increases. More people were making their living in nonagricutural pursuits. The size and scale of enterprises grew. Mining, cotton production, trade, especially in grain, grew. The economy grew and the market networks expanded. However a disparity in incomes may have occured.
China enjoyed prosperity and growth during the Ming dynasty.