The growth of China in the modern times has been often heralded as a miracle. In reading through the brilliant research report by Brandt, Ma, and Rawski titled Divergence and Convergence — I want to share a few observations of how China went from one of the world’s most advanced country in the 1200’s, to one of the most backwards in the 1800s, and finally, returned to a fraction of its former height from 1970’s.
The main thrust of Brandt, Ma, and Rawsk’s essay is to explain what kept the socio economic structure of the Ming-Qing dynasty largely stable and resistant to outside change/innovation, and how despite the technological innovations in the Song dynasty, the Ming-Qing fell behind Europe in development, leading to the great Divergence and China’s disappointing 19–20th century history.
Song Dynasty
The stroke of the first millennium (1000) found China to be in a good place. The Song dynasty (not to toot my namesake) was a period of great innovations: gunpowder, the compass!, movable-type printing, and other inventions. They built great ships of nautical engineering, and sailed as far as Egypt. The gunpowder also gave them… flamethrowers.
However, unfortunately, the Song dynasty was briefly interrupted by Mongol Invasions. Genghis (and his son, ) riding down the Steppes, eventually overcame the Song’s largely agrarian and sedentary defenses, overthrew the dynasty and set up the Yuan Dynasty.
Unfortunate for Yuan Dynasty, the Mongols turned out to be much more skilled at warfare than at administration, and the Yuan soon turned over to the Ming Dynasty.
Where’s the Money?
Skipping ahead of the Qing conquest of the Ming, and expansion of the territory to roughly the same size as the China we recognize today, we can explore the question: What did China do for 600 years? How come it did not dominate the world, using the accelerated inventions of the Song Dynasty? Why did it fall behind the Europeans?
Brandt, Ma and Rawski use the story-telling of political economy to describe the uncomfortable fiscal homeostasis that China settled into during the Qing dynasty, despite a massive population boom.
First, lets set see what it looks like:
Yowza. That is an exponential curve. China’s population boom started in advance of the 20th century, with an 7X increase from the 60M at the end of the Ming Dynasty to 430M 400 years later at the end of the Qing Dynasty.
However, the amount of money that the central government had to use every year stayed the same. That’s right, the government had consistent tax revenues.
Notice how China’s per-capita income of silver barely doubled from 940 to 2651, while that of Great Britain 50X’d in the same time period.
As a result, we might expect the government expenditure to stay relatively constant as well:
If you pay attention to the red triangle line, that is the expenditure of the Qing state. Notice the flatline from 1766–1848. Where the gov was spending money, the majority of it went to creating more efficient agricultural infrastructure, from canals to increase irrigation. There was frankly not much remaining money to go around.
The Land Tax
The reason for this discrepancy between massive population explosion and constant government expenditure is because China was taxing LAND. Since the Tang tax reform, China’s imperial court switched from a system of taxing labor to taxing land (hopefully I can write a post about this in the future). Some 73% of the Imperial Court’s annual revenue came from the Land Tax.
“With stable revenue and substantial population growth, per capita tax collections fell steadily: by 1850, per capita revenue was less than half the level for 1700.”
This gave rise to “de facto” private land ownership, and some advanced financial systems of debt/leverage and lending built around land ownership, but for the purpose of the country’s administration, it meant that they had to send officials to each province and enforce the collection of the tax.
The Hard Knock Life of the Tax-Man
Life for the Tax-Man—the official magistrate representing the central authority of the emperor in far-flung distant lands — was hard and understaffed (remember the gov constant expenditure, despite having a multiple more members in his community?) The Confucian examinations, which elevated him to this position of Imperial Official, also forbade him from administrating in his own hometown, so he was very much a stranger in strange lands. Without much of a central budget, he had to rely on his ability to work with the local landed elite, who, used their powers to demand a tax haircut in exchange for cooperation. As one historian notes:
When the guild resisted . . . there was nothing the magistrate could do but request a waiver [exempting the guild from the higher likin rates]. . . . He was unable to survey the palm- growing areas to tax them directly, because the guild and its supporters refused to cooperate. He was unable to muster community support. . . . when he called a meeting of local gentry . . . no one came (Mann 1987, p. 130).
Estimates for the Qing dynasty, in 1902, was that the total revenue gained from land tax, was a meager 2.4% of the value of the production from the land.
This dynamic, of local tax escapism, robbed the Qing dynasty of much forward momentum in terms of growth. If anything, one historian described the Qing as much more about:
“registering and checking the actions of various provincial administrations [rather] than . . . assuming a direct initiative in the con- duct of affairs”
The overarching feeling of the Qing dynasty, was akin to being the fragile center of a spider web of provincial activities, in an uneasy standstill while the European world was undergoing the traumatic rebirth through the Industrial Revolution.
Part 2 (policies and attitudes on innovation, crisis at Japanese victory, reform) to be continued.
