Confucianism ideas were hostile to commerce did mean that the official attitude toward merchants was negative, that the state sometimes attempted to control and regulate commerce heavily.
The commercial revolution of the Song through the political breakdown of the Tang Empire allowed commerce to expand beyond the confines of official markets and for merchants to grow wealthy by operating more freely, the conjunction of factors that produced the commercial revolution of the Song did not come together until around 1000, a generation after the reunification of China under the Song dynasty (960). The Song established its imperial government in the city of Kaifeng, along the Yellow River in north China, which became a lively center of population and commerce in addition to government. Kaifeng lay at the station of an extension of the Grand Canal that linked the Yellow and Yangzi Rivers and was thus strategically located as a transport depot for goods brought by boat from the rich Yangzi delta region. An efficient transportation network, by both water and land, along with increased agricultural production, population growth, and the expansion of markets were key factors in the commercial revolution of Song times. Agriculture and Population By around 1000, the introduction of new strains of early-ripening and drought-resistant strains of rice from Southeast Asia began to increase the supply of food. These imported strains of rice either allowed planting and harvesting more than one crop a year, because the rice plants matured quickly, or enabled farmers to plant rice in places that were not well irrigated and where it had not been possible to plant before. At the same time, improvements in dam technology allowed the reclamation of lowland swampy areas to open up new land for farming. The resulting increases in food production contributed to population expansion. From a rough estimate of 60 million in the Tang dynasty, China’s population grew to around 100 million by the mid-thirteenth century. Population growth, in turn, contributed to the expansion of markets for products. An expanded marketplace, coupled with efficient transportation networks facilitated by stable political conditions under the Northern Song (960–1126) encouraged regional specialization of production for the market.
Market economy in contrast to the localized economy of the Tang, in which villages produced what they used and trade was limited to local exchange (with the exception of long-distance trade in luxury goods and salt), the growing market economy of the Song encouraged the production of goods for the market which had expanded with the increase in population.
Specialization in the production of certain goods for the market generally means the more efficient use of labor and raw materials. Regional specialization was feasible because there were relatively rapid and efficient means of transporting goods to central markets—both roads and waterways—and a distribution network of merchants and warehouses to store goods and bring them to markets in a timely fashion. Regions began to specialize in the production of textiles, such as silk, which required the cultivation of mulberry bushes and the feeding of silkworms as well as the skill of weavers, or in agricultural products such as oranges. Tea, for example, was produced in the southeastern province of Fujian but was marketed to regions all over China. Capitalist mindset emerged.
Trade with China’s nomadic neighbors, who were at times enemies, provided the Chinese both markets for their own products and a source of necessary or luxury goods. During the Northern Song, the Chinese imported silver, hemp cloth, sheep, horses, and slaves from the Khitan people in southern Manchuria. During the Southern Song (1127–1279), after the north had been conquered by the Jurchen Jin state, the Chinese exported tea, rice, porcelain, sugar, silk, and other goods to the Jurchen in exchange for medicines, horses, and other items.
Commerce and currency in the Northern Song, state revenues from commercial taxes and state monopolies (principally iron and salt) equaled the yield from agrarian taxes; by the Southern Song, commercial revenues far exceeded the income from agrarian taxes. The increasing use of both metal and paper currency and the development of institutions of banking and credit that took place in the Song were both vital aspects of the commercial revolution of the period. Between the eighth and eleventh centuries, for example, the output of currency quadrupled, while the population grew much more slowly.
The growth of money, barter or exchange of goods to an increasingly monetized economy of scale that integrated regional economies was aided by the use of paper currency and credit.
Technology and the commercial revolution, shipbuilding and navigational technology, advances in printing, the textile industry, and ceramic production were part of the technological changes of this era. Printing technology movable type—separate letters or characters made of clay, wood, or metal arranged to make a page of text—was invented in China 400 years before its appearance in Europe.
Textile and ceramics industries the new technology of printing was used to spread knowledge of other new technologies used in agriculture and textile production, and in this way contributed to the economic revolution of Song era. Advances in the textile industry improved production, the scale of which is suggested by an early-fourteenth-century account of a mechanical spinning wheel that could spin 130 pounds of thread in twenty-four hours. Along with cotton and silk textiles, the production of ceramics expanded, with both imperial and private commercial kilns scattered throughout the empire.
Iron and industry for many centuries Chinese craftsmen had produced cast iron, and they also made steel, utilizing smelting techniques well in advance of Europe. The iron and steel produced were used for many purposes, but farm tools, currency, and armaments were by far the most important. By the early twelfth century, the production of crude iron concentrated in north China ranged between 35,000 and 125,000 tons, a level comparing favorably with that of England several centuries later. Since the north China plain was already deforested by the Tang and therefore access to charcoal was limited, growth in the production of iron during the Northern Song was dependent on the use of coal, an innovation that Europe did not employ until the eighteenth century.
Chinese society and the commercial revolution even as a “commercial revolution” took place in Song China, the lives of the vast majority of the population were still tied to the land and to agricultural production. Many of those who farmed the land were also bound to landlords as tenants who owed rent and often labor service to their landlords. Others were free and farmed plots of their own lands. The continuities of life in rural villages were also affected by the changes in the commercial revolution. For example, cities might offer better of employment for landless laborers in the countryside who were dependent on being hired for agricultural work
Economic changes in China were on such a large scale that they called “revolutionary.” As commerce grew in importance, Chinese people experienced significant changes in the social order, particularly the growth of merchants as a social and economic class. The daily material lives of people were transformed by the expansion of commerce, which brought new goods and products to eat, wear, and use, and by developments in technology, such as printing and metalworking. However, after the commercial revolution, which was followed by the Mongol conquest, China turned inward, rejecting the exploration of the rest of the world.
Farmers in China, found out that producing for the market made possible an easier life. Farmers sold their surpluses in nearby markets and bought charcoal, tea, oil, and wine. Some of the products on sale in the city depicted in the scroll would have come from nearby farms, but others came from a faraway place. In many places, farmers specialized in commercial crops, such as sugar, oranges, cotton, silk, and tea. The economy was getting more capitalized over time.
Merchants in the cities became progressively more specialized and organized economically. They set up partnerships and joint stock companies, creating separation between owners (shareholders) and managers. In large cities, merchants were organized into guilds according to the type of product they sold. Guilds arranged sales from merchants to shop owners and gradually set prices. The guild leaders would deal with the taxes.
Water transport, however, has always been far cheaper than going over land. The South, with its many rivers and waterways, had an advantage in this, but also the northern cities too, were served by water transport, often canals. The Grand Canal linked the North to the Yangzi River region. One section of the Beijing Qingming scroll shows men unloading bales of grain from a riverboat, as a merchant, seated, directs them.