Until the 1960s, historians viewed China's history – and especially its economic history – through the lens of Western teleologies of historical change predicated on the progress of “freedom,” leading either to capitalist democracy or socialist utopia. As I have written elsewhere, whether construed in Weberian terms as a peculiar type of “bureaucratic feudalism” or in Marxist categories as a species of the “Asiatic mode of production” genus, both Western and Asian scholarship portrayed imperial China as a static society whose periodic changes in regime barely caused a ripple on the stagnant pond of despotism. The immobility of imperial Chinese society and economy typically was attributed to the parasitic nature of the imperial state and its dominant social class, the “gentry.” Although the Chinese empire was believed to share the basic features of “oriental despotisms” in general, its unique longevity could be explained by the remarkable durability of the gentry's dominance over government office, landowning, intellectual life, and culture. In contrast, for example, to the dispersion of social power among monarchs, warriors, clerics, seigneurs, and urban corporations in medieval Europe, the gentry monopolized political, economic, and cultural authority and deflected challenges from any insurgent group, be they merchants, military officers, or disaffected intelligentsia. In the eyes of Marxist historians, the persistence of gentry rule perpetuated feudal property ownership and relations of production in which the rentier elite absorbed the surpluses generated by the peasant families under their dominion. American scholars balked at employing the category of “feudalism,” given its Marxist associations, but their paradigm of “traditional” Chinese society essentially conformed to this depiction of economic inertia.

The most potent challenges to this image of an unchanging China were voiced by Japanese historians. Naitō Kōnan, writing in 1914, was the first to posit a fundamental transformation in Chinese government and society from the eighth to the twelfth centuries (what has become known as the “Tang-Song transition”) during which aristocratic domination dissolved and was superseded both by a more autocratic state and greater autonomy for village society. Naitō's disciple Miyazaki Ichisada, in his 1950 book East Asia's Modern Age, likened the Tang-Song transition to the European Renaissance, both of which exhibited the secularization of society and culture and the rebirth of rational philosophy on one hand, and the rise of cities, commerce, and the free disposition of property and labor on the other, that have become hallmarks of the modern world.

Many of imperial China's political institutions and practices took shape during the reign of King Zheng of Qin (r. 247–210 BCE), first as king of Qin and ultimately as China's first emperor. The final triumph of Qin over its last remaining adversaries in 221 BCE owed much to the First Emperor's ruthless ambition and political acumen. The First Emperor vowed that his dynasty would last “for ten thousand generations,” but the Qin state quickly fell into disarray after the emperor's death in 210 BCE. His successor was murdered in 207 BCE, plunging China once again into strife and war. It has become commonplace to conclude that the Qin fashioned a strategy for conquest but failed to develop a plan for governing; such an inference is mere shibboleth, however. The Qin also established the institutional infrastructure and political practices that made possible the creation of a unified empire over a vast territory.

The military triumph of Qin owed not to any advantage in arms or tactics but rather the state's mobilization of the entire society for warfare. The army served as the model for the organization of society. Qin officials enrolled the entire population into units of five households for purposes of taxation, military service, and public works construction. Social hierarchy was based on military rank. Generous rewards and promotions were doled out to meritorious soldiers and farmers. Local officials were held to exacting standards in the execution of their duties and faced harsh punishment for even slight shortcomings. In the words of the contemporary Confucian philosopher Xun Zi, the rulers of Qin “employ their people harshly, terrorize them with authority, embitter them with hardship, coax them with rewards, and cow them with punishments.”

As we observed in Chapter 2, the centralizing regimes of the Warring States era replaced patrimonial governance with a fiscal state. The fiscal state would remain the foundation of imperial rule, but it assumed different forms over the long arc of imperial history. The distinctive form of the fiscal state during the Qin and early Han empires can be categorized as a military-physiocratic state that fused a system of social ranking and obligations derived from military organization with an agrarian economic base. The Qin-Han rulers shared the physiocratic disdain – most cogently expressed by Legalist philosophers – for commerce as inherently sterile.

China's Bronze Age, beginning c. 2000 BCE, gave birth to the earliest states in East Asia and the technologies and institutions that made possible the mobilization of material and human resources on a large scale. The first state, Shang (c. 1570–1045 BCE), developed political institutions and a ritual order that enabled it to impose its dominion over much of North China's Central Plain, the alluvial floodplain of the Yellow River that became the heartland of early Chinese civilization. From c. 1200 BCE the Shang rulers began to use writing to record the divinations essential to the royal ancestral cult and the conduct of their government. Shang rule was overthrown by the upstart Zhou dynasty in 1045 BCE. The Zhou ecumene, centered in the ancestral Zhou homeland of the Wei River valley in the west, encompassed the entire Central Plain as well. The Zhou retained many features of Shang culture, including its ritual practices, writing system, and bronze metallurgy. But the Zhou also introduced new conceptions of divine authority and political sovereignty and developed a more formalized bureaucratic government to extend the reach of royal power.

If any civilization merits the appellation “Bronze Age” it is surely ancient China. Bronze ritual vessels occupied the central place in the political, social, and cultural order of the earliest Chinese states. The sheer quantity of surviving bronze artifacts from China's Bronze Age is without peer among ancient civilizations: more than 12,000 Zhou bronze ritual vessels exist today, and no doubt many yet remain undiscovered in tombs and caches. The scale of these artifacts also is enormous: one bronze cauldron from c. 1200 BCE weighs 875 kg., and archaeologists recovered more than 10 tons of bronze vessels from a single cache buried in the fifth century BCE. Beginning in the late Shang period, but especially with the onset of the Zhou dynasty, the ruling elite began to inscribe bronze vessels for commemorative purposes. These inscriptions primarily signified the purpose for casting the vessel and commemorated the honors the maker received from the king that brought glory to his lineage and his ancestors. Zhou bronze inscriptions – notably the “appointment inscriptions,” which record the bestowal of offices, rewards, and duties by the king – also contain valuable information about the organization of the Zhou state and the self-conception and cultural practices of its rulers.

Emperor Hongwu's project of social and economic reformation delivered a shocking blow to China's commerce and industry, especially in Jiangnan, the empire's economic heartland. The author of a Suzhou gazetteer published in 1506 acidly observed that Hongwu's campaigns against Suzhou's landowners, the forced removal of wealthy families to the capital, and the conscription of artisans into hereditary service to the state, had severely retarded the city's population growth and economic recovery even a century afterward. But by the end of the fifteenth century Hongwu's key institutional innovations – the lijia village household organization and the liangzhang tax headmen – were essentially defunct, and the system of hereditary occupational households inherited from the Yuan had atrophied as well. The ban on private maritime trade was still in force, although Fujian seafarers easily evaded the lax net of enforcement. By the early decades of the sixteenth century commercial growth was beginning to revive, despite lingering obstacles such as a stagnant money supply following the closure of the Ming mints in the 1430s.

Economic developments in the sixteenth century utterly erased Emperor Hongwu's vision of village autarky and self-sufficiency. Steady gains in agricultural production and the formation of national markets for industrial goods such as cotton, silk, and porcelain stimulated regional specialization. The growing allure of overseas trade following the abrupt influx of silver imports – first from Japan, and later from Spain's American colonies – beginning in the 1540s galvanized agitation against the interdiction of foreign trade, which was repealed in 1567. Massive infusions of foreign silver stoked the fires of commercial and industrial growth during the last century of the Ming, especially in coastal regions with ready access to foreign markets. The expansion of the money economy, the growth of rural industries, the increasing spatial range of markets, the greater volume of foreign trade, the disappearance of bound labor, and the ascendancy of private enterprise over state economic management all contributed to what some scholars have referred to as a “second economic revolution” (after the first “economic revolution” of the Tang-Song transition) beginning c. 1550.

Commercial revival in the late Ming

Hongwu's campaigns against the entrenched landowning elite of Jiangnan resulted in a leveling of rural society and more fragmented landholdings. Individual farms typically consisted of a number of plots spread over a wide area; the properties of large landowners often were scattered over several counties.

With the fall of the Western Zhou in 771 BCE, royal majesty faded into a long, sputtering twilight. The lords of regional domains, large and small, broke free from Zhou rule, although they continued to pay homage to the ritual preeminence of the Zhou kings. Many of the several hundred newly independent polities took the form of agrarian city-states, consisting of a capital city where the ruling lineages dwelled and adjoining rural settlements whose inhabitants worked the land under servile conditions. The largest territorial states were located on the periphery: Jin in the north, Qi in the east, Qin to the west, and Chu stretching across the southern perimeter of the Zhou ecumene (Map 2.1). The political world of the early Eastern Zhou period – known as the Spring and Autumn era (771–481 BCE), named after the chronicle of this age purportedly written by Confucius (551–479 BCE) – was wracked by chronic warfare. Many states perished, victims of internecine struggles as much as foreign attack. Even the most powerful states were not immune to these centripetal political forces. Jin, descended from the Zhou royal house, expanded northward from its original base in the lower Fen River valley through conquests of non-Zhou peoples. But powerful noble families brazenly asserted their own independence, and the Jin ruling house itself succumbed to a coup-d’état by a junior kinsman in 678 BCE. Despite its military might, Jin “was actually a congeries of semi-independent city-states that spent almost as much time fighting their ruler and each other as waging war with other states.”

The endemic disorder that afflicted the Zhou ecumene in the Spring and Autumn era was temporarily ameliorated by the advent of the institution of the hegemon (ba 霸), which first appeared in 667 BCE. The first hegemon, Lord Huan of Qi (r. 685–43 BCE), claimed to act in the name of the Zhou king to summon the rulers of the various states to assemblies, negotiate truces and succession disputes, and marshal the collective forces of the various states to pursue military campaigns against non-Zhou peoples. But the Qi rulers’ assertion of hegemonic authority rested on their precarious military supremacy and transient political alliances. By the end of the seventh century BCE the rulers of Jin had usurped the mantle of hegemon, although they likewise faced constant challenges to their nominal suzerainty, notably from the upstart southern state of Chu.

The Jin conquest of North China in 1127 once again sundered China in two, just as in the Period of Disunion that followed the nomad invasions of the early fourth century. For the next two and a half centuries North China was ruled by foreign conquerors, first the Jurchen and then the Mongols, while the refugee Song court retained control of the southern half of the empire. The military and fiscal dilemmas that had bedeviled the Northern Song leadership persisted unabated throughout the Southern Song. Yet ambitious programs of state-led reform, exemplified by Wang Anshi's New Policies, lost favor after the debacle of 1127. During the Southern Song period, the ascendant Neo-Confucian political philosophy stressed moral rejuvenation and community-based reforms under local leadership rather than state-driven institutional transformation. Nonetheless, the turn toward monetization of taxes and procurement of military provisions through market mechanisms continued and even intensified during the Southern Song. In any event, in the early thirteenth century the state's ability to manage its fiscal affairs abruptly deteriorated. The outbreak of renewed war with the Jin and civil war in Sichuan in 1205–08 utterly bankrupted the central government, forcing it to resort to ruinous fiscal and monetary policies. The Mongol conquest of the Jin in 1234 only heightened frontier tensions. After the Mongol invasions of the Southern Song began in earnest in 1257, the Song leadership again attempted radical reforms, such as an ill-fated program of confiscating lands from great landowners in the Yangzi Delta, with disastrous results. In 1276 the Mongols under the leadership of Qubilai, grandson of the great khan Chinggis, seized the Song capital of Hangzhou, and in 1279 the Mongols deposed the last Song emperor.

The loss of the Central Plain and the relocation of the Southern Song capital to Hangzhou reinforced the preeminence of Jiangnan as both the agricultural and commercial heartland of the Song Empire. Swelled by refugees from the north, Jiangnan's population grew by nearly 50 percent between 1102 and 1223, in contrast to an estimated 9 percent increase for the Southern Song territories as a whole. Market towns and trade networks sprang up in the wake of the rapid advance of rice paddy polders across the plains of the Yangzi Delta, linking rural producers of grain and silk to Hangzhou and other major cities.

The outbreak in 755 of the An Lushan rebellion, led by a disgruntled frontier general of Sogdian descent who turned against the imperial court, dealt a shattering blow to the Tang dynasty. The reigning emperor was forced to flee Chang'an, which was seized by An Lushan in 756 and later sacked by a marauding Tibetan army, and seek refuge in the southwest. By the time the rebellion was quelled in 763 the rich agricultural heartland of the Central Plain lay in ruins and hundreds of thousands had perished. The Tang was restored to power only through the crucial support of Uighur mercenaries and by ceding effective control of most of the northern provinces to regional warlords. The Tang polity emerged from the rebellion only a shadow of its former self, its basic institutions irreparably broken.

The period from 750 to 1250, which scholars commonly refer to as the “Tang-Song transition,” is widely recognized as the crucial watershed in the economic history of imperial China. Over the course of this period the rice economy of the Yangzi River valley supplanted the traditional heartland of the Central Plain as the Chinese economy's center of gravity. The shift of population from north to south inaugurated a series of profound transformations in agricultural productivity, technology, industrial growth, transport, finance, and international trade. Sustained economic growth fueled unprecedented demographic expansion. By 1100 the empire's population reached 100 million, far surpassing the peak levels (roughly 60 million) of the Han and Tang. The new foundations of the Chinese economy laid during the Tang-Song transition would endure throughout the rest of China's imperial era.

The extraordinary sweep of economic change during the Tang-Song transition bespoke fundamental institutional transformations. Following the collapse of the equal-field system, private ownership of land became the rule. Progressive taxation based on household assets of villagers and towndwellers alike replaced the principle of uniform taxation that underlay the Tang zu-yong-diao tax regime. The abolition of statutory labor obligations for most of the population and the long-term decline in personal bondage eliminated key constraints on the allocation of household labor. The steady trend toward monetization of taxation – and the sharply reduced scale of tax payments in cloth in particular – likewise allowed households greater freedom to invest their labor and resources as they saw fit.

In the first half of the nineteenth century, China descended into a prolonged economic depression. Although population growth continued uninterrupted down to 1850, signs of economic malaise already were visible by 1820. The “Daoguang Depression” (named after the reigning Daoguang Emperor, r. 1820–50) coincided with grave political challenges and social turmoil. China's defeat at the hands of Great Britain in the Opium War (1839–42) led to the forcible opening of China to foreign trade on terms dictated by the British. The Taiping rebellion (1851–64) posed an even more dire threat to the survival of the Qing Empire. Although the Qing ultimately succeeded in suppressing the insurrection, it devastated the richest provinces of China and caused the deaths of tens of millions. In retrospect, the Opium War fiasco and the ruin left in the wake of the Taiping rebellion fostered the conventional portrait of nineteenth-century China – one that largely persists today – as a poor and backward country.

The sharp contrast between the “prosperous age” (shengshi 盛世) – as many contemporaries described it – of the eighteenth century and the apparent poverty and stagnation of the nineteenth century has long compelled scholars to ask what forces had brought about such a drastic change in China's fortunes. Many historians have focused on structural explanations: the inherent constraints of the smallholder peasant economy, the limits of premodern technology, and the absence of systems of knowledge that would promote technological and scientific innovation to overcome those limits. Others have proposed more historically contingent factors, especially China's integration into a global economy dominated by Western imperialist powers, resulting in the drain of wealth abroad, deindustrialization in traditional sectors such as cotton manufacture, and the peripheralization of China as a producer of cheap raw materials for the industrializing West.

Questions about the nature of the premodern Chinese economy and its modern fate have been thrust into new perspectives in recent debates about “the Great Divergence” in global economic history, which we examined briefly in the Introduction. It had been commonplace assumption that the onset of the Industrial Revolution in Europe was premised on institutional foundations – urban development, mercantile capitalism, demographic behavior, and a liberal-democratic political culture – established in medieval or early modern times.

The early Han state largely preserved the imperial order erected by the Qin Empire. The imperial government supported a smallholder agrarian economy through land grants, public investments in agricultural technology and infrastructure, and regulation of the marketplace to protect producers and consumers alike. Emperor Wu enlarged the regulatory role of the state and reorganized its fiscal structure for the purposes of military expansion and administrative control of a far-flung empire stretching into Central Asia, Korea, and Vietnam. But in the post-Emperor Wu era, in the face of swelling costs and the philosophical rejection of its mercantilist principles by a thoroughly Confucianized officialdom, this apparatus of imperial control no longer could be sustained. As the state retreated from Wu's fiscal policies, economic inequality sharpened.

In the early years of the first century CE, the statesman Wang Mang's brazen attempt to reestablish an aggressively interventionist imperial state went so far as to usurp the throne in the name of returning to the golden age of ancient Zhou. But the political and economic chaos that ensued, followed by Wang's overthrow and the swift restoration of the Han dynasty, further discredited state activism. The decision in 30 CE by the first Eastern Han (25–220 CE) emperor to end military conscription marked a key watershed in the abdication of the Qin-Han imperial order. The principle of service to the state as the foundation of social order had been abrogated, and instead increasing numbers of people became subject to the rising class of magnate landowners.

Nonetheless, domestic peace nourished economic growth. The intensification of agriculture through new technologies and the great expansion of arable land supported a growing population that numbered 60 million people on the eve of Wang Mang's coup-d’état. Trade and money remained vital to the manorial economy that reached full flower during the Eastern Han period. But over the course of the second century CE the imperial state, wracked by partisan conflict, weakened and collapsed. The final dismemberment of the Han Empire by competing warlord regimes in 220 CE ushered in a Period of Disunion that would last for nearly four centuries.

The centuries of disunion were characterized by the privatization of power – military, political, and economic.

During the Period of Disunion the economies of North and South China diverged in crucial ways. The devastation inflicted by repeated nomad invasions gravely disrupted agricultural production and commerce in North China. This anarchic warfare finally came to a halt after Tuoba Gui, a chief of the Xianbei steppe nomads, conquered much of the Central Plain in 398 and laid the foundations for the Northern Wei dynasty (386–534). Under Northern Wei dominion North China enjoyed a degree of political stability that eluded the more transitory Chinese-ruled dynasties in the south. Eventually the Northern Wei leaders turned away from the political and cultural traditions of the steppe and sought to refashion their state in the image of a Chinese empire. In so doing the Northern Wei promoted a synthesis of Chinese and nomadic institutions based on bureaucratic rule and a caste-like social order of hereditary occupational statuses that succeeded, at least in the short run, in reviving agricultural production. The political economy of the Northern Wei in its mature phase (after 485) recapitulated the military-physiocratic principles of the first empires: like the Qin–early Han rulers, the Northern Wei leaders sought to magnify the state's military might through equitable allocation of lands, uniform taxation in goods and labor, and universal military conscription. In contrast to the south, however, commercial development was muted and monetary circulation remained feeble.

The Northern Wei also fostered the formation of a hybrid Xianbei-Chinese ruling class through intermarriage between the Xianbei nobility and the leading Chinese aristocratic clans. Although a few favored Chinese clans were admitted to this ruling elite, in general the social power of Chinese local magnates in the north atrophied over the course of the Northern Wei dynasty. Xianbei military domination and the equal-field landholding system inaugurated by the Northern Wei did not deprive local magnates of their privileges or wealth, but they bolstered the state's control over the common people. The institutional infrastructure erected by the Northern Wei state survived the fall of the dynasty in 534 and its division into rival regimes. The success of Yang Jian, founder of the Sui dynasty (581–618), in reinstating unified imperial rule over both North and South China in 589 can be attributed in no small degree to the political and institutional achievements of the Northern Wei.