China in the Local and Global Economy

History, Geography, Politics and Sustainability

Steven Brakman, Charles van Marrewijk, Peter J. Morgan, Nimesh Salike

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138307988
• eBook ISBN: 9781351390781
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The history of China dates back thousands of years, with periods of decline followed by periods of growth and innovation. This book puts the last 50 years – China's most recent period of growth – into perspective. It explores the changing national and international connections within China and between China and other parts of the world, and their importance for understanding the past, current, and future developments of the Chinese economy.

The book brings together leading international contributors from China, Japan and Europe to consider the historical developments of these connections, the importance of natural and man-made connections for the Chinese economy, the role of institutions and policies for understanding the connections and their sustainability.

This book will be of interest to scholars and researchers focusing on China, economics, geography or international trade.

Part I

Historical connections

1 China as a nation

Bas van Leeuwen and Jan Luiten van Zanden¹

1.1 Introduction

Worldwide, China is one of the oldest unified states that has persisted to the present day. At the end of the Warring States period (ca. 475–221 BC), during which all regions competed for control, the Qin Dynasty (221–206 BC) rose to power through a series of victories over competing states. This resulted in China’s unification in 221 BC. One reason for the success of the Qin was its location in the heartland of Shaanxi Province, which was effectively shielded from invasions and simultaneously enabled access to the large fields in the north of China (Peralta 2014). Moreover, the Qin managed to exploit the resources of the country – basically men and land – more intensively than did its competitors, creating a solid basis for its ultimate victory.

The unification of China by the Qin was already viewed as important at the time. For example, in the following dynasty (Han, 206 BC–AD 220), the history of the Han (Hanshu) acknowledged that ‘the Qin unified the world’ (Swann 1950). Moreover, three interrelated sets of ideas and policies introduced by the Qin laid the basis for the state that has persisted to this day. The first of these was the introduction of legalism as a replacement for Confucianism as the basic philosophy of the state. Whereas Confucianism essentially preached the good of the people and the importance of family and education, legalism developed during the Warring States period, ca. 476–221 BC, (which was characterized by intense warfare) and started from the belief that it was the task of the state to direct all persons for the good of the state. Consequently, people derived their value from their usefulness to the state. Related to this is a second aspect, namely a distrust of education. Because education could drive people to independent thinking and criticism of the state, it was discouraged; books were burned, and scholars were executed. Although this policy was reversed during the following Han Dynasty, the prominence of the state remained an important feature of the education system. Third, the Qin started to build physical infrastructure such as the Great Wall and the Grand Canal. Combined, these three policies would unite China.

This process of unification has lasted essentially to the present day. Although China has known major dynastic cycles and even extended periods during which different political entities competed for control over the entire empire, the gradually expanding territory of the empire remained the basic framework for these cycles and this competition. Likewise, the three policies described previously were continued, to some extent. After the fall of the Qin, the policy of legalism was reversed and replaced by Confucianism mixed with a soft form of legalism. Likewise, schooling was resurrected to a certain extent, but only for the purpose of creating a class of loyal government officials to feed the bureaucracy (the famous civil examination system). The trade links established by the Grand Canal and by other infrastructural projects made it possible for new rulers to extract tribute from the various regions of China as soon as they took power. Hence, new dynasties were able to make full use of the existing system.

Of course, China as a state did not remain unchanged after the Qin. In terms of population, an indicator of political and economic change, the centre of gravity of the empire relocated many times over the course of its long existence. The ancient heartland of the empire was in the North, in the Yellow River valley, with capital cities such as Xi’an (home of the first emperor) and Kaifeng (capital during the 960–1127 Northern Sung Dynasty). Part of the population migrated to the South, to the Yangtze valley (and even further south to the Pearl River valley), driving out the non-Han population. From the Southern Sung onwards, the Yangtze valley became the economic centre and remains so to the present day. During the Qing, there was a further expansion to the North, the East, and the Southeast – incorporating new regions such as Tibet, Xinjiang, Manchuria, and Taiwan.

Other changes occured in trade. Until about 1500, when the geography of world trade changed dramatically, China was the eastern hub of the Great Silk Road, which, in practice, was a set of interrelated caravan routes that connected the empire with India, Persia, and the Middle East. The world economy was dominated by an urban belt stretching from Egypt and the Ottoman Empire to the great metropoles of China, together forming the core area of world trade and industry. During the Han Dynasty (206 BC–AD 220), intense commercial exchange along this network connected China with the Roman Empire; similarly, the Sung Dynasty (960–1279) coincided with the flowering of the Arab world. In particular, when strong states dominated both ends of the Silk Route, facilitating commercial exchange via ‘law and order’; and/or when the regions in between the two nodes where unified into one polity, as occurred during the Great Mongol Empire of the 13th and 14th centuries, trade via these routes expanded rapidly and connected the great cities of the East and West into one dynamic urban system (Abu-Lughod 1989). Europe, especially Western Europe, was at the margin of this commercial system until the rise of the Italian city-states (Venice, Genova). However, from the late Middle Ages onwards, Western Europe became increasingly dynamic, developing new commercial routes in the 15th and 16th centuries – basically via the circumnavigation of Africa – that would fundamentally change the geography of international trade from the 17th to the 19th centuries. Initially, European commercial enterprises such as the Dutch East India Company were relatively weak compared with the vast powers of the Chinese Empire. For example, the Dutch attempted to establish a strong base on the island of Taiwan but were unable to control it. The terms of international trade were set by the empire, which allowed trade to take place only in Quandong (Kanton/Guangzhou) during much of the 17th and 18th centuries. However, this changed dramatically in the early 19th century, as demonstrated forcefully by the First Opium War (1839–1842). The Chinese state continued to decline in power and was humiliated by foreign powers – first the British, followed soon after by all of the major Western countries. This set in motion (or rather accelerated) a process of fragmentation of state power that ended in the long war with Japan (1937–1945) and the subsequent civil war.

In Section 1.2, first we take a closer look at China’s dynastic cycles, finding that the end of a dynasty, which was often accompanied by massive warfare, was characterized by population declines. The dynastic cycle theory is further confirmed by looking at population indicators such as urban primacy (the capital city’s share of the total population), which is often considered a proxy for the extractive capacity of the state, and which declined at the end of dynasties. This pattern weakened during the Qing Dynasty. Although the dynastic cycles persisted, urban primacy had been weak from the beginning of the Qing period and decreased even further over the course of the dynasty and the subsequent Republican period. To understand why the pattern of strong and weak state capacity existed and why the pattern declined (though it did not disappear) during and after the Qing, in Sections 1.3 and 1.4 we deal with the two aspects of a strong bureaucracy (centralization and the civil examination system), which is a proxy for state success. This provides a measure of state success, but not a link to economic development. Hence, in Section 1.5, we turn to the importance of state success with regard to economic development, with reference to the so-called ‘Needham puzzle’ (i.e. why Chinese development was at or above the level of development in Europe in the 15th century but then fell behind later).

1.2 Population development and state capacity

As pointed out earlier, the various dynasties since the Qin moved away from a patriarchal system in which the ruler shared power with his subjects to one of autocratic rule, resulting in the massive building of infrastructure, a theory of obedience to the state, and, eventually, an education system for training reliable civil servants. Both Elvin (1973) and Von Glahn (2016) claim that the rise of metalworking was one of the reasons for this shift, as it increased the value of a standing army under one ruler.

However, as was also pointed out earlier, state power was not the same either during or between dynasties. For example, during the course of the Eastern Han Dynasty (AD 25–220) there was a shift away from the autocratic mode into a more market-oriented system, causing a rise in land inequality that lasted well into the subsequent warring period of the Three Kingdoms (AD 220–280) (Von Glahn 2016). Stability, along with autocracy, returned at the end of this period and further strengthened during the following Jin Dynasty (AD 265–420) that once again united China. Just as during the late Han, during the Tang Dynasty (AD 618–907), we see a move away from a state-regulated economy towards the end of the reign (Von Glahn 2016, 206), which was further extended in the period of turmoil during the subsequent Five Dynasties and Ten Kingdoms periods (AD 907–960).

Opinions vary regarding the subsequent Song (960–1279), Ming (1368–1644), and Qing (1636–1912) dynasties – Von Glahn (2016) argues that there was essentially a gradual development of market forces over time, whereas Elvin (1973) favours a rapid development during the Song, followed by a stable system, with the exception of the highly disruptive Yuan Dynasty (1271–1368). Although we agree with Von Glahn to some extent, we stress that this move towards market-related forces, combined with declining state capacity, was still very limited. As we point out in subsequent sections of this chapter, although less severe than the those of previous dynasties, the first Ming emperors were strong rulers who aimed to impose restrictions of various kinds on society; e.g., by introducing an integrated monetary system. In that respect, the Song did not prove to be a watershed. However, this was different during the Qing: As a non-Han (i.e., Manchu) dynasty, the pressure the Qing was able to exert on society – through taxation or otherwise – was much more limited. However, even during the Qing, we witness an increasing rise of market forces over time that continued during the Republic of China period (1911–1948), which was characterized once more by warfare. It can be argued that this continuous pattern of a strong and then weakening state, followed by the rise of market forces, persists to the present day, with the initial phase of New China (1948–present) being characterized by a much stronger role of the state followed by the increasing dominance of market forces sinc...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Notes on contributors
• Preface
• Part I Historical connections
• Part II Geographical connections
• Part III Policy connections
• Part IV Future connections and sustainability
• Index