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date: 29 March 2020

Economic History of Ming-Qing and Modern China

Summary and Keywords

The Ming Dynasty (1368–1644) marked in the long history of China a period of cultural, political, demographic, and economic renaissance, after less than a century (1271–1368) of rule by the alien Mongol conquerors from the steppes. The wealth of the Ming Empire attracted European traders and missionaries with whom foreign silver, crops, and knowledge flowed into the country at unprecedented speed. Meanwhile, the Ming Empire reached out to the Indian Ocean with the largest armada in the world at the time.

The Ming rule was ended by a military takeover by Manchu mercenaries who did not return to Manchuria after helping the Ming authorities crack down on a rebellion, an important factor that ultimately dictated the behavior of the Qing state (1644–1911). The main institutions and policies of the Ming remained intact, and in 1712 the Qing state voluntarily capped its total tax revenue, a Confucian gesture to gain legitimacy, which marked a major step toward a withering state whereby the tax burden became lighter and consequently state control over the population and territory became weaker. At the beginning, the waning state produced some positive outcomes: both farmland and population multiplied, and domestic and foreign trade were prosperous. The Qing economy outperformed that of the Ming and became one of the largest in the world by 1800, with a decent standard of living.

Even so, a withering state was a time bomb. The unintended consequences of the weakening state loomed large. Externally, the empire did not have the ability to prevent the invasion of foreign bullies. From 1840 to 1900, China lost all five wars it fought with foreign forces. Internally, unrest swept the empire from 1860 to 1880. Imperial order and tranquility was replaced by anarchy, a rather logical outcome of a withering state. To a great extent the benefits of growth during the Qing rule had been lost by the second half of the 19th century.

Meanwhile, fully aware of the root cause of the problem, the Qing elite sought solutions to save the empire from within. This led to a more open approach to foreign aid, loans, and technology, known as the “Westernization Movement” (c. 1860–1880). This movement marked the beginning of state-led modernization in China.

The path of modernization in China was, however, rugged. It began with the ideal of “Chinese knowledge as the foundation and Western learning for utility” (until 1949), then proceeded to “Russian (Soviet) ideology as the foundation and Russian (Soviet) learning for utility” (1949–1976), and then to “Russian (Soviet) ideology as the foundation and Western learning for utility” in the post-Mao era (1977–present day). With such a swing, the performance of China’s growth and development fluctuated, sometimes violently.

Keywords: Confucianism, growth performance, Ming Renaissance, Qing withering state, state-led modernization, Westernization Movement


Steady scholarly attention has been paid to two important periods in China’s history: the Ming–Qing (1368–c. 1840) and the modern (post-1840) eras. The starting point, the year 1368, was when the Chinese established the Ming Dynasty, after a long battle against the alien conquest of the Mongols (the Yuan). The great divide between the two has been set at around 1800 to 1840. The Qing Dynasty ended officially in 1911. Thus there was an overlap between these two periods.

The most striking feature across these six centuries of China’s history is the discontinuity in ideology, institutions, and dynamics of the economy between the Ming–Qing and the modern eras, despite continued efforts to link these two together for various reasons. In sum, during the Ming–Qing period, China was firmly under an empire system that thrived on high-yield agriculture, freedom to trade, and low taxation. The state was tiny, and government interference with the economy was minimal. The Modern Period turned that pattern upside down, after China’s indigenous system was systematically replaced by an imported one. As a result, China in the Modern Period has changed beyond recognition from the viewpoint of the Ming–Qing elite and state-holders.

The Ming Renaissance and Legacy

The Ming Dynasty was established in a war against the Mongol conquerors who ruled the East Asian Mainland in two steps: areas north of the Yangzi River in 1234 ad and the areas south of the river in 1279. In the process, the remarkable Song economic revolution was brutally and comprehensively stopped. The destruction is well documented in the official The History of the Yuan Dynasty (Yuan Shi), published in 1370 (Song, 1370). First, the Mongol rule was one of apartheid. No Han Chinese were permitted to engage with long-distance trade. Commerce was commissioned to Mongol allies from the Middle East—Persians and Arabs. Second, no Han Chinese were employed as government officials above the county level. All middle- and high-ranking government positions were granted to either Mongols or their missionaries from the Middle East and beyond (including some Europeans such as Marco Polo and his relatives). With this system, Confucian education and Confucian scholars became obsolete. China’s indigenous education-cum-social mobility and its well-established civilian rule came to a sudden end. Finally, and most damaging, the Mongols did not recognize Chinese property rights over capital and land. Farmland was confiscated, and farmers were made production slaves—something that China had not had since the beginning of the empire in 221 bc. The Chinese language was not used at the Mongol Court, and silk clothing was banned, as were second crops.1 Taxation was excessive and inflation unchecked.2 Predictably, a major recession followed, and China’s population declined by over 50%, despite a doubled territory under Mongol control.

The Ming Dynasty was established by Chinese rebels against the Mongol military conquers. In 1368, the rebel leader Zhu Yuanzhang (1328–1398) declared the new dynasty in Nanjing and hence ended Mongol rule in China. All the Mongol policies were radically reversed. Politically, Confucian civilian rule was resumed with the reopening of schools and Imperial Examinations for civil servants. Economically, farming was reinstated as the government priority; farmers/landowners were re-protected with landholding property rights (including freehold and lease hold rights) with systematic cadastral surveys; trade was reopened to all citizens; Chinese traditional copper/bronze coins were reissued; and taxation was lowered. Militarily, the Great Wall was completely overhauled from one end of China’s northern frontier to the other to shield against the Mongols and others. The message was very clear: the eight-decade Mongol rule was over, and China was back on its feet.

Soon China’s economy and society recovered. By around 1500, China’s population had rebounded to its pre-Mongol peak (the Song level) at 100 million (see Figure 1).

Economic History of Ming-Qing and Modern China

Figure 1. China’s demographic trend (in millions), 1–1900 ad.

Sources: Official censuses as the baseline: Liang (1980, pp. 4–11); adjusted official population data are based on Deng (2004). Estimates for comparison: Durand (1960); McEvedy and Jones (1978, pp. 166–174); Chao (1986, p. 41); Maddison (1998, p. 267); Jiang (1998, p. 84); Ge (2000, pp. 831–832); Zhao and Chen (2006, p. 110).

The first area to recuperate was China’s agriculture, which benefitted from the renewed policy of physiocracy (“agricultural fundamentalism”). With farmers’ property rights secured once again, the renewed production and investment incentives led to active pursuit of better yields. Inventions and innovations took off in two directions. The first was the renewal of the Song practice of spring–winter double cropping in the Yangzi valley (Deng & Zheng, 2015), which was forbidden under Mongol rule. This alone boosted China’s food supply. The second was the systematic adoption of the New World crops—potatoes, sweet potatoes, and maize, side by side with chili and tobacco. The New World crops made China’s dry and hilly regions more productive than ever.3 Double cropping and adoption of the New World crops made China’s agricultural sector the most productive in Asia, if not the world, at the time. Such a development fully justifies Elvin’s (1973) notion of a “high-level equilibrium trap” (pp. 298–316).4

Meanwhile, with the Ming wealth of agricultural surpluses, which were then translated into exportable manufactures such as silk and porcelain, large quantities of foreign silver were imported, completely unchecked by the state, into China. As Antonio de Morga famously wrote in 1609, “the purchase price [of Chinese goods] is paid in silver and reals, for the Shangleys (shangren商人‎, Chinese merchants) do not want gold, or any other articles, and will not take other things to China” (Chuan, 1981, p. 851; Schurz, 1985, p. 68). Silver imports served as a reliable proxy for China’s manufacture capacity, while such capacity showcased China’s economic achievement and strength.5 The surge of China’s silver intake continued during the Qing period (Figure 2).

Economic History of Ming-Qing and Modern China

Figure 2. China’s Golden Age of silver imports, 1650–1830.

Source: Li (2009, pp. 31–58). Note: Data in a three-year interval.

How much silver was imported by China? A rough indicator, on the one hand, is the 250-year-long “Manila Galleon Trade” run by the Spanish Crown (Flynn & Giráldez, 2002; Frank, 1998; Schurz, 1985). The operation began in 1565, eight years after the Portuguese gained their footing in Macao along China’s south coast, and lasted until 1815.6 From Acapulco across the Pacific Ocean to Manila, the annual galleon shipment was silver exclusively for Asian markets, mainly India and China. On the other hand, it is believed that the total silver output of the Spanish-Portuguese New World (i.e., Brazil, Mexico, Peru, Potosi, and Chile) over the mid-16th century to the mid-19th century was between 90,000 and 150,000 metric tons.7 In addition, before 1800 New World silver contributed about 80% to 85% of to the world total (Barrett, 1990, p. 225; Cross, 1983, p. 397). This makes the world total 112,500 to 187,500 metric tons by 1800. A stylized figure is that about a third of the New World silver ended up in China, and it means that China was able to sell manufactures of the same value in order to buy the precious metal (Deng, 2008). If this is true, China was a major industrial production center in the world. This was not trivial by any standard.

Evidence also indicates that silver landed on China’s soil via bilateral trade. As a result, China’s silver stock consisted of all shapes, sizes, and qualities. The most common were (a) the Dutch “Knight with Sword” (馬劍‎), (b) the Spanish “Original Silver Dollars” (本洋‎) with various names such as “Hair Coils” (大髻‎, 小髻‎) and “Alien God” (番佛‎, (c) Portuguese “Cross” (十字‎), (d) Mexican Carolus Dollar or “Eagle Dollar” (鷹洋‎), and (e) American “Liberty Head” (Hao, 1986, pp. 35–46; Zhao, 1990, pp. 613–614).

However, the continuous inflow of silver into China did not automatically mean a free market. China’s import and exports were controlled by the Canton-cohong monopoly whereby China’s foreign trade was closely regulated by the Ming–Qing authorities to safeguard China’s economic sovereignty and interests.8 After all, apart from silver (Bjork, 1998, pp. 25–50; Flynn & Giráldez, 1995; Frank, 1998, ch. 3), China needed very few items from the outside world, while its unique products of tea, porcelain, and silk sold so well globally that foreign traders had no choice but to deal with the Ming–Qing state monopoly to obtain the goods (Deng, 1997). In this case China could be called rent-seeking.

Moreover, the wealth of the Ming Empire began to attract European visitors to China in great numbers. Among them were Jesuit missionaries. These Europeans no longer worked for the Mongol conquerors but for the Ming and then the Qing authorities. Despite their religious agendas, the real legacy left by these missionaries was post-Renaissance science and technology, mainly in the form of mathematics and astronomy. This knowledge diffusion was implemented by a long chain of highly visible imperial appointments, starting with Matteo Ricci (1552–1610). Ricci reached Macao in 1582 and worked his way to the capital city of Beijing in 1601, where his career as a cross-cultural broker began.9 He had a fellow Jesuit with him named Diego de Pantoja (1571–1618).10 They were then succeeded by Sabbatino de Ursis (1575–1620),11 Johannes Schreck (1576–1630),12 Johann Adam Schall von Bell (1592–1666),13 Nicolas Longobardi (1565–1655), and Jacques Rho (1593–1638).14 Their inputs were reflected in the Ming Imperial Almanac (Daming Chongzhen Lishu) during 1629–1634 and included a zodiac armillary sphere, a quadrant, and a celestial globe in the Ming Observatory (Zhang, 1974, “Imperial Almanac One”). The political change over to the Qing rule made little difference: apart from Schall von Bell there was Ferdinand Verbiest (1623–1688),15 Thoma Pereira (1645–1708),16 Philippus Maria Grimaldi (1639–1712),17 Joachim Bouvet (1656–1730),18 Jean Francois Gerbillon (1654–1707),19 Bernard-Kiliam Stumpf (1655–1720),20 Joseph Giuseppe Castiglione (1688–1766),21 Ignatius Koegler (1680–1747),22 Andre Pereira (1690–1743),23 Augustin de Hallerstein (1721–1774),24 Antonius Gogeis (1701–1771), Fé1ix da Rocha (1713–1781), José de Espinha (1722–1788), José Bernardo de Almeida (1728–1806), André Rodrigues (1729–1796), Alexandre Gouveia (1787–1807), Vervissimo Monteiro da Serra (?), and Gaetano Pires Pereira (?–1838). More missionaries at the grassroots level were unrecorded knowledge brokers.

The relationship between the Ming–Qing elite and the European Jesuits was one of mutual respect, although there were complaints that most Jesuit missionaries became Sinicised and hence failed their mission of converting the Chinese.25 The strong resistance to the spread of Christianity came from well-entrenched Confucian beliefs and ancestor worship, which led to the notorious “Chinese Rites Controversy.” From the point of view of the Chinese elite, the utility of Christianity was no more than to “compliment Confucianism to make the latter better” (tianxue bu ru), instead of replacing the latter completely.

However, the Jesuit mission was unilaterally ended in 1773 by Pope Clement XIV, who dissolved the Society of Jesuits. The common interpretation of the pope’s action was that those Jesuit missionaries were converted by the Chinese rather than the other way round. Without a doubt, China’s tastes and practices found their way to Europe. This is evident in the fashion of chinoiserie as well as the idea of moral governance on the other end of the Eurasian continent (Maverick, 1946; Yan, 2002; Zhang & Wu, 2006). In addition, European manufacturers began to reverse-engineer goods produced by India and China (Berg & Eger, 2002; Hobson, 2004).

Finally, on the diplomatic-military front, there were from 1405 to 1433 seven spectacular ocean-going voyages of the Ming Armada to Southeast Asia, South Asia, and East Africa under the leadership of Admiral Zheng He. Such a voyage involved as many as 208 vessels and 28,640 men. The motivations of the voyages were to demonstrate newly crowned Emperor Chengzu’s unrivaled organizational capacity, wealth, and influence within the empire and beyond. Chinese gifts and exotic goods and animals served much the same purpose. Nevertheless, the Ming voyages presented to the world a technological feat. First, they demonstrated improvements in ship design and construction under the Song (960–1271): the Ming “treasure ship” was some 40% longer than China’s previously largest vessel. Second, a new navigation aid, known as “sea-way compass charts,” was in use for the first time. Third, 15 new geographic places were recorded: eight in South and Southeast Asia, three in the Arabian and Red Sea regions, and four in the East African Coast (Deng, 1995; Levathes, 1994). Thus the Ming period was by and large a success story.

Demystifying the Qing Rule

The Qing Dynasty was founded by the Manchu military. They acted as foreign mercenaries for the Ming authorities, who were fighting a losing battle against a major rebellion which had lasted for a decade (1634–1644). It was a desperate bid on the part of the Ming. The Manchus entered North China at the Shanhaiguan Pass of the Great Wall and the Ming rebellion was stopped. But the visitors decided to stay, and hence began a dodgy start of the “Manchu rule” in China, whereby there was the perpetual issue of the legitimacy of the Qing.

This legitimacy issue was the Sword of Damocles over the head of the Manchu ruling elite, which in turn had a profound impact on the behavior of the new military conquerors: A historic lesson of the Mongols during the Yuan Period was now learned, and the Manchus tried to be more Chinese than the Chinese themselves. As a result, apart from the Ming repertoire quartet of physiocracy (with private landholding property rights), civilian rule, social mobility, and foreign trade monopoly, which were inherited in wholesale fashion, the Qing Court promoted a new quartet, consisting of Manchu-Han power-sharing, low taxation, social welfare, and village autonomy.

First, in terms of power-sharing, positions in the military were carefully divided between the Han Chinese, Manchus, and Mongols (see Table 1). On the civilian officials’ front, appointments were dominated by Han Chinese on the provincial level (see Table 2).

Table 1. Ethnic Distribution of Military Officers, % in Total, 1644–1911






1st–3rd Grades





7th–9th Grades





Source: Zhang (2001, pp. 6, 38–43, 57, 79, 105–106, 126); Song (1992, pp. 477–487).

Note: Data for the elite “Eight Banners.”

Table 2. Ethnic Distribution of Governors-General of Provinces, % in Total, 1644–1911

































Source: Dai (1993, pp. 1206–1390).

Note: The total number of appointments were 335. SZ = Shunzhi Reign (1644–1661); KX = Kangxi Reign (1662–1722); YZ = Yongzheng Reign (1723–1735); QL = Qianlong Reign (1736–1795); JQ = Jiaqing Reign (1796–1820); DG = Daoguang Reign (1821–1850); XF = Xianfeng Reign (1851–1861); TZ = Tongzhi Reign (1861/1862–1874); GX = Guangxu Reign (1875–1908); XT = Xuantong Reign (1909–1911).

Second, the Qing tax burden was deliberately lower than it was during the Ming rule. The Qing state also abolished the Ming corvée on all artisans (Fan, 2008, pp. 50–66). In 1712, Emperor Kangxi issued the famous decree of “freezing the tax revenue despite future population growth and prosperity” (shengshi ziding, yongbu jiafu) (Zhao, 1986, vol. 11, p. 9261). For the next 140 years, the Qing total annual Land-Poll revenues were capped at 30 million taels of silver (1,125 metric tons), despite a strong growth in population and gross domestic product (GDP). In the end, the Qing tax burden on per unit of land declined between 30% and 50% (Liu & Fei, 1977, pp. 373–376), and the Qing per capita Land-Poll burden was halved (Figure 3).

Economic History of Ming-Qing and Modern China

Figure 3. Ming-Qing direct-tax burden, 1380–1800.

Sources: Taxes: Liang (1980, p. 428). Population: (Deng, 2004, Appendix 2).

In the early 19th century, the total tax burden on the rural economy was about 0.16 silver taels (6 g) per head, or 70 taels (2.6 kg) per square mile of farmland.26 According to Gamble (1943), the average daily wage during 1807–1850 for unskilled laborers in Beijing remained stable at 0.09 to 0.15 taels for the busy season. So the Qing annual tax burden accounted merely for one to two days’ wages for an unskilled worker (Gamble, 1943, p. 62; Yu, 2000, p. 860). It was so light that people “barely noticed the tax system, almost as if they suffered no tax burden at all” (Mann, 1987, p. 16).

Third, the Qing state operated more comprehensive famine/disaster relief than in China’s premodern past. This was a rudimentary social welfare provision through income redistribution, and it worked well. There was no famine on an empire-wide scale before 1850 (Lee & Wang, 1999, ch. 3), despite the fact that good harvests were never evenly distributed across the empire: from 1821 to 1910, 70% of counties had normal or bumper harvests and 30% experienced crop failures to some degree (Fairbank & Liu, 1980, part 2, p. 7; see also Buck, 1937, pp. 30–31). The key components of the Qing welfare system were annual budgeting, empire-wide food monitoring, and “even-keeping granaries” (changpingcang) and “charity granaries” (yicang) in every province and county. This granary system maintained a stockpile of 45 million piculs of unhusked rice (3.3 million tons) to be deployed (Peterson, 2002, vol. 9, p. 602). In addition, “cash aid,” often 50% of the relief, was made available to meet people’s needs for farming equipment and working animals, of which the government kept no stock. There was also passive aid in the form of tax exemptions (chu, huan, jian, and mian) (Peterson, 2002, vol. 9, p. 603). Qing China had, in all, 2,074 counties,27 and the Qing aid schemes covered the whole empire many times over (Table 3).

Table 3. Number of Recipient Counties of Qing Disaster Relief, 1674–1911


Tax exemptions



















Source: Zhao (1986, vol. 11, pp. 8827–8937).

Last was grassroots autonomy on the village level. The Qing administration stopped voluntarily at the village gate (Scalapina & Yu, 1985, p. 8; also Ch’ü, 1962). Official litigation became optional. Citizens often had a choice between laws and customary rules (Cohen, Edwards, & Chen, 1980, pp. 78–84). If unsatisfied with the official ruling, people usually returned to customary rules (Bernhardt & Huang, 1994, p. 116). Such customary rules matched the Confucian moral teaching and were thus tolerated by the state. The gold standards were “seeing nothing which upsets the rites, listening to nothing which upsets the rites, speaking nothing which upsets the rites and doing nothing which upsets the rites” (Wu, 1993, p. 22),28 as well as “not treating others in a way you would not want to be treated” and “cherishing one another” (airen).29 Sanction and punishment against offenders included monetary payments, ostracism, or disfranchisement from the community.30

The state role in the economy was minimal as well. In rural fairs, traders paid no government taxes (until 1850) (Skinner, 1964, 1965a, 1965b). Silver imports were free from government control (Deng, 2008). Even the Qing bronze coins were subject to counterfeit (diqian, siqian) on an industrial scale across the empire (Kuroda, 2005). The consequence was de jure autonomy of grassroots communities (Bernhardt & Huang, 1994, pp. 27–32; Chen & Myers, 1976, 1978; Katz, 1957, pp. 28–39).

The synergy of the old and new policy quartets created prosperity: China’s population quadrupled (see Figure 1) with reasonable standards of living, and the economy entered a “high level equilibrium trap” (Elvin, 1973, pp. 298–316).

Compared with the Ming, the Qing did almost everything a bit better. But there was a catch: the state failed. According to anti-Qing activist Sun Yat-sen (1866–1925), “In [Qing] China, everyone has maximised his own freedom; consequently, society has become a tray of loose sand” (Sun, 2000, p. 86), and “We have enjoyed too much freedom for too long” (Sun, 2000, p. 92). Sun declared that his revolution would restrict people’s freedom (geren zhuyi) in exchange for a stronger state (guojia zhuyi) (Berger, 1984; Burns & Hart, 1977; Dinwiddy, 1989; Griffin, 1986; Smith & Sosa, 1969). Therefore, Karl Wittfogel’s (1957) hypothesis of “Oriental Despotism” certainly cannot be applied to the Qing state.

Failure of the Confucian State and China-Wide Pandemonium

The failure of the state during the Qing period was not because it did too many wrong things. Rather, it increasing did too little. In other words, the state voluntarily withered, meaning that it stopped governing (Deng, 2011, ch. 3).

First, a tiny number of bureaucrats were expected to administer a huge empire—more than 11 million square kilometers and 100 million to 400 million people. In 1700, the population–officials’ ratio was 2,300:1. It was widened to 15,136:1 in 1833. In particular, the population-to-magistrate ratio increased to 193,000:1 in the 1830s.31 In this context, the Qing central government in Beijing hired only 2,546 administrators to keep the vital apparatus afloat (Wanyan, 2005, pp. 172–181; Yang, 1992, pp. 420–421; Zhang, 2001).32 This left about 24,000 mandarins to manage the army and 18 provinces (sheng), 190 prefectures (fu) and 2,074 counties (xian).33 It was simply impossible for the bureaucracy to provide the population with adequate services. Second, the size of the military was reduced. The Qing defense force had in total 2,650 officers and 780,000 troops when the began.34 By 1851, the soldiers in active service had shrunk to 350,000 (Zhao, 1986, vol. 11, p. 9308). This represented an absolute decline in China’s national security. As a result, the Qing state no longer monopolized violence in society upon which law and order depended. The gap between the population and government officials increased about 18-fold and that between the population and army soldiers more than 43-fold. Meanwhile, in the 1850s there were about 600,000 Taipings and the 200,000 Nian rioters, not counting the rebellious Miaos and Muslins (Zhao, 1986, vol. 12, p. 10144). This explains why, in a numbers game, the Qing army never won any major battle in the 1850s (Luo, 1984).

Yet the enlarging gaps made the Qing state increasingly smaller and less expensive to run, which matched the practice of Confucian benevolence, with feather-light taxation of the Qing. Table 4 highlights the momentum.

Table 4. Fluctuations in Population, Bureaucrats, and Military, 1700–1850



Annual growth %

Population* (A)




Paid officials (B)




Active soldiers (C)




A:B ratio

846.9 (100)

15,111.4 (1,784)

A:C ratio

26.2 (100)

1,139.8 (4,350)

Sources: Zhao (1986, vol. 11, pp. 9305–9308); Liang (1980, pp. 10–11); Yang (1992, pp. 420–421).

Note: * Populations figures are for 1701 and 1833 as proxies.

One may attribute the lasting peace and active autonomy to the voluntary and unilateral stepdown of the Qing state. Power vacuums appeared everywhere. This was a time bomb that finally went off: China-wide pandemonium broke out simultaneously in the 1850s and 1860s—the Taipings in the southeast, the Nians in the northeast, the Miaos in the southwest, and the Muslins in the northwest. The unrest spread across 60% of the Qing territory for two decades. The only regions free from the unrest were Mongolia, Manchuria, and Tibet, autonomous domains where the Qing state did not rule directly (Yi & Zhu, 1965, 1968a, 1968b, 1990).

China paid a heavy price for a withering state. It took the Qing state two decades to put down the unrest. But the damage was done. Demographically, China-wide unrest cost a huge loss in number of lives: China’s total population dropped by 49.2 million, from 431.6 million in 1851 to 364.4 million in 1880 (Deng, 2004, Appendix 2). It took 60 years for China’s population to recover to pre-1850 levels. The most affected provinces were Shanxi and Shaanxi in the north, each losing over 70% of its standing population,35 and Anhui, Zhejiang, and Jiangxi in the south, each losing half of its standing population (Cao, 2001, vol. 5, pp. 467, 489, 505–508, 535, 540, 552–553). The German geologist Baron Ferdinand von Richthofen (1833–1905), who visited the ex-Taiping region in 1871, witnessed many urban centers reduced to a new jungle; farming in the Yangtze Valley completely stopped (Ho, 1959, pp. 242–243). So the direct impact of China-wide unrest was an agriculture crisis.

Fiscally, the Qing state lost 42% of its Land-Poll Tax and 78% of its Salt Tax for 10 long years, worth 300 million silver taels minimum, just to the Taipings alone (Liang, 1980, pp. 401–411; Peng, 1957, vol. 1, p. 592; Zeng, 1966–1983, vol. 6, pp. 20–21). Financially, the direct cost to Beijing’s containing the pandemonium was 167 million taels against the Taipings (Zhao, 1986, vol. 11, p. 9283), 31.7 million taels against the Nians, 101.1 million taels against the Miaos, and 118.9 million taels against the Muslims (Peng, 1990, p. 136).36 The aggregate was 251.7 million taels (18,200 metric tons). Another 420 million taels were paid by provinces (Peng, 1990, pp. 130, 137). Thus the national total was 838.7 million taels.37 But state revenues declined sharply, and the state faced huge budget deficits. As raising tax burden was a Confucian taboo, the only alternative was to borrow heavily from foreign lenders, which in turn created a damning pretext for the uprising republicans to topple the Qing rule altogether, although that occurred later in 1911.

The Qing elite were alarmed. A wide range of reforms began, all aimed to strengthen the withered state, coûte que coûte. From 1852 onwards, radical measures were implemented top-down by the Qing leadership in four areas:

  1. 1. The timeless civilian governance was swiftly replaced by military rule in every troubled province. As the traditional army officers were shielded from running the economy and dealing with the bureaucracy, this new task was befallen upon the emperor-trusted government ministers in Beijing, who were asked to return to their home province and convert from a top administrator to a military leader in a learning-by-doing process. The reward was unprecedentedly handsome: Each new military leader was permitted to control his province politically, militarily, financially, and diplomatically. These individuals thus became new feudal lords within the empire. However, there was a catch: this process excluded all Manchus, Mongols, and Tibetans due to the tranquility in their homelands and facilitated the rise of a powerful group of Han Chinese strongmen in politics. This paved the way for two mutually exclusive development paths for China’s future in the 20th century: Chinese warlordism and Chinese nationalism.

  2. 2. New provincial officials and soldiers, recruited by and loyal to the new provincial military governors, were encouraged. With this, the age-old Imperial Examinations for bureaucrats became redundant and the Confucian-educated officials marginalized. Meanwhile, provincial modern armed forces and arsenals mushroomed across Qing provinces (see Table 5).

Table 5. Qing Provincial Arms Industry


Starting year

Annual output



Bullets (100,000 rounds)



Rifles (65,000), bullets (8.6 million), cannons (742), shells (1.6 million), gunpowder (6.7 million pounds), and ships (15)



Rifles (52), bullets (16.1 million), shells (40,000), and gunpowder (6.1 million pounds)



Bullets (240,000)



Rifles (18,681), bullets (3.3 million), and shells (5,400)



Rifles (18,250), bullets (15.6 million), cannons (96), shells (84,000), and gunpowder (7,200 pounds)



Rifles (18), bullets (131,500), cannons (64), and shells (65,800)

Source: Based on Xu (1986, pp. 25, 28, 32, 34, 35, 36); Li (2000, p. 423). For the Jiangnan Arsenal in particular, see Wright (1957, p. 293).

  1. 3. The imperial fiscal system was generously deregulated. Tax revenues were allowed to be retained by local military authorities. Local military authorities were also granted complete freedom to impose and collect new taxes, especially indirect taxes such as the Transit Tax (likin or lijin). This policy made Chinese strongmen financially independent. The vertical control of the state finance became also redundant.

  2. 4. Provincial authorities were permitted to borrow money directly from foreign sources and hire foreign advisers (see Table 6). Chinese strongmen were diplomatically independent too. The provincial liaison with foreign powers created the impression that the latter “carved” China, something that cannot be further from the truth.

Table 6. Direct Foreign Borrowings, Beijing versus Provinces, in 106 Taels, 1853–1911























Source: Li (2000, pp. 133–1175).

Note: Excluding foreign borrowings for railway projects.

These were desperate measures for desperate times. Due to all of these changes, a new political system emerged, a system that was made of province-based mini-states as an alternative to the withered and failed empire under one government. The new system indicated a major discord with the empire system since 221 bc when the Qin Dynasty was first established.

Predictably, a group of Chinese strongmen emerged in the Qing political arena, the best examples being Zeng Guofan (1811–1872), Zuo Zongtang (1812–1885), Li Hongzhang (1823–1901), Zhang Zhidong (1837–1909), and Yuan Shikai (1859–1916). Basically, Zeng Guofan, Zuo Zongtang, Li Hongzhang, and Zhang Zhidong led the war to extinguish all the rebellions. Their victory gave the Qing Dynasty a new lease on life for six decades from 1850 to 1910.

However, the newly established mini-state system was a double-edged sword. It planted the seed for feudalism, which was the antithesis of the empire system. Yuan Shikai, the last great military leader of the Qing, forced the six-year-old Emperor Xuantong (1906–1967) to abdicate in 1912 and hence terminated the Qing monarchy in a bloodless coup d’état.38 So, ironically, the same forces that saved the dynasty temporarily ended the empire for good from within. In the following decades from 1911 to 1949, China had to go through bloody wars to replace feudal warlords and their provincial mini-states to reinstate one ideology, one leader, and one state—in other words, to rebuild the empire.

Reforms and Related Growth Performance

Without a doubt, the year 1852 (the time when government ministers were sent to their home provinces to build mini-states) marked the beginning when the model of Confucian moral governance was abandoned by the Qing elite. From then until today, to build a strong state with/under an authoritarian military rule has remained consistently the mainstream goal among China’s political class. This goal justified all the means, including all forms of political violence: “Political power grows out of the barrel of a gun,” as so bluntly put by the communist leader Mao Zedong (Mao, 1967, vol. 2, p. 224 [1893–1976, r. 1949–1976]). Consequently, China became a huge battlefield from 1850 to 1949.

Meanwhile, radical changes instantaneously took place in ideology and institutions for the same end. Regarding changes in ideology and institutions, a stylized route map with three landmarks was as follows: from (a) “Chinese knowledge as the foundation and Western learning for utility” (zhongxue weiti xixue weiyong) during post-1850 Qing and Republican times (1911–1949), to (b) “Russian (Soviet) ideology as the foundation and Russian (Soviet) learning for utility” under Mao’s rule (1949–1976), and finally (c) “Russian (Soviet) ideology as the foundation and Western learning for utility” in the post-Mao era (1977–present day). These reforms have had a significant impact on the performance of China’s economy.

The pros and cons of a state-led growth model are apparent. It allows the economy to grow fast but often distorts the economic structure. Such distortion in turn may slow the economic growth.

First Landmark, 1850–1949

The first landmark, lasting for close to one century, from 1850 to 1949, was ushered in with the “Westernization Movement” (yangwu yundong) and the “Self-Strengthening Movement” (ziqiang yundong) from 1860 to 1890. The essence of these two interlinking movements was systematic adoption of Western military technology and industrial enterprises to rebuild the army.

Granted, the Ming–Qing elite had long been aware of the efficiency of European firearms since around 1600 when Jesuit missionaries introduced European cannon technology to the Ming army. Later, there was the early Qing conflict with the Ming Loyalists, who were equipped with European firearms thanks to their trade with the West. Furthermore, there was the 1839–1840 Opium War when a small British flotilla invaded China and defeated the Qing navy in a one-sided victory. However, not until 1850 was adoption of European firing power irrelevant to the Qing state, which depended overwhelmingly on the Confucian moral persuasion to maintain peace and order. External pressure, including foreign “gunboat diplomacy,” was trivial, as the opening up of a few treaty ports presented little threat to the Qing rule. Everything changed after 1850 when the real possibility of the dynasty’s demise loomed large. The acid test was in the battlefield. The supremacy of the adopted military technology was apparent: In 1861, for example, the troops led by Zeng Guofan fired a total of 500,000 catties of bullets (250 tons) to eliminate 10,000 Taiping troops armed with machetes and spears. Zeng’s side lost only 100 soldiers (Luo, 1957, p. 275). With such a ratio, the fate of the rebels was doomed.

Backward linkages from the arms industry gradually worked their way into the economy. The most visible developments occurred in shipbuilding, the telegram, and railways. Qing shipyards built vessels larger and more powerful than their counterparts in Meiji Japan (see Table 7).

Table 7. Shipbuilding Capacity, China Versus Japan, 1875–1885






Jiangnan Arsenal (Chinese)

Zhiyuan (1875)

300.0 chi




Baomin (1885)





Yokohama Shipyard (Japanese)

Seiki (1876)

203.0 ft




Tenryu (1885)





Sources: Wei (1905); Wang (1963, p. 82); Jentschura, Jung, and Mickel (1997).

Note: Chi ≈ ft.

By 1887, all provincial capital cities and strategic locations in China were linked up by a telegraphic network of over 23,000 kilometers (46,450 li) (Institute of Modern History, 1957, vol. 4). By 1936, China’s telegraphic lines grew to 100,000 kilometers (Zheng, 1984, p. 39). The momentum was only stopped by wars in 1937 through 1949. The network was among the longest in Asia.

Similarly, railways took off. In 1894, China had only about 360 kilometers of railway lines in aggregate. This grew to over 9,610 kilometers by 1911, 13,000 kilometers by 1927, and 21,800 kilometers by 1937 (Wang, 2000, vol. 3, pp. 2021–2022). The growth represented a 60-fold increase over four decades with an annual growth rate of 10%. The rational of such a growth was the railway’s cost efficiency (see Table 8).

Table 8. Transport Costs, Railway Versus Others, in Yuan/Ton




0.032 (100)

0.024 (100)


0.12 (375)

0.19 (800)

Pack animals

0.19 (594)

0.18 (750)


0.32 (1000)

0.34 (1417)


0.33 (1031)

0.30 (1250)

Sources: Arnold (1926, p. 533); Zhang (1987, p. 16).

From 1910 to 1936, railway freight measured by ton-kilometers increased over four-fold and passengers measured by person-kilometers over six-fold (Yan, 1955, pp. 207–208). During the same period, the railway linkages extended to locomotives and freight cars on the one hand and coal on the other: China’s locomotives and freight cars both grew by a factor of three and China’s coal output by a factor of four (Yan, 1955, pp. 102–105). Additionally, by 1937, China had 111,000 kilometers (Rawski, 1989, pp. 209, 214, 217) of motor roads, plus 2.7 million kilometers of air links (Zheng, 1984, p. 39), comparable with India at the time.

Enthusiastic foreign investors rushed in, making investment deals with provincial military authorities (see Table 9).

Table 9. Investments in China’s Railways, 1888–1946



Chinese, private

Chinese, state











% in Total





Source: Research Centre of History of Railways in China (1996); Yang (1997).

Note: * In million taels of silver.

Apart from the arms industry, a three-pronged industrial structure took shape by 1900: mining, transport, and light industry (see Table 10).

Table 10. Modern Firms by 1900


No. firms

Capital (in million taels)











Light industry










Source: Xu (1986, pp. 76–84).

Note: All the silver yuan figures are converted at one yuan = 0.637 silver taels.

Behind the growth was a strong upswing in China’s banking and capital market, which grew 10-fold in the 1910s and 1920s alone (see Table 11).

Table 11. Growth in the Banking Sector, in Million Silver Yuan


No. banks

Total capital

1900 price






















Sources: Guo and Zhang (1999, p. 158). Price conversion is based on Liu and Wang (1996, p. 179).

Generally speaking, China’s changes toward modernity were a passive response to the 1850 outbreak of the empire-wide unrest. The initial goal of cracking down on four simultaneous rebellions was fully achieved with the compounded effect from an institutional change toward feudalism and adoption of Western military and industrial technology. This led to China’s first modern growth in armament, telecommunication, transport, mining, light industry, and banking, something that had not been initially planned. In that regard, China was an overachiever.

The downside, however, was equally obvious: feudalism and warlordism made the country unstable, which in turn gave foreign invaders like Japan and the Soviet Union opportunities—which they both took. In 1924, backed by the Red Army of the Soviet Union, Outer Mongolia declared independence from China. In 1932, Japan created a huge colony called Manchukuo in Manchuria. It then launched a full-fledged war to conquer China Proper in 1937 throughout 1945.

Second Landmark, 1949–1976

The military victory of the communists over the republicans in the 1947–1949 civil war can be attributed greatly to the help from the Soviet Union. It was in the Soviets’ best interest to make China their ally with a compatible ideology and economic system. In a “take-and-give” relationship, Mao’s winning party in the communist-republican civil war was obliged to model after the Soviet Union, and hence the episode of “Russian (Soviet) ideology as the foundation and Russian (Soviet) learning for utility” or total “Sovietisation” in China’s modern history.

The following top-down changes were swift and made with military precision. By 1957, with a four-pronged approach, all the personnel disloyal to Mao’s regime had been purged, all forms of private ownership had been converted to public ownership (state or collective), all market activities had been replaced by an administrative plan and government-run resource allocation, and all able-bodied citizens were employed by the new military-cum-party-state. These radical reforms seem to have been a great success. These institutions and the ideology, imported from the Soviet Union, made Mao’s China another Soviet Union.

Barely a year later, Mao launched the “Great Leap Forward” (1958–1960), aiming to make China a major iron and steel producer in Asia, which was accompanied by 156 industrial-military aid projects from Stalin to make China look modern and powerful. The great leap turned out to be a great flop: Not only was the metal output short of the target and of shoddy quality, but the project also caused the 1959–1962 famine, in which an estimated 30 million to 40 million citizens died of starvation despite the well-recorded normal weather conditions and internal peace (Becker, 1996, ch. 18; Cao, 2005; Jin, 1993; Yang, 2008). What saved Mao’s face was China’s nuclear test in 1964 and satellite launch in 1970, which were regarded as coups thanks largely to the 156 Soviet-aided projects. What is often ignored is that weapons are to a great extent deadweight to the economy, which was the case of Mao’s China.

From 1957 to 1976, what really concerned Mao most was how to crack down on internal resistance against his authoritarian rule. He personally launched three mass drives known as “Anti-Rightists” against liberal intellectuals (1957), “Four Clearances” (1964) against grassroots officials, and the “Cultural Revolution” (1966–1967) against rank officials in the party and government. To avoid Mao’s purges from deviating the current analysis, one can take his purges as a constant.

The growth performance under Mao’s rule can be boiled down to two adjectives: slow and wasteful—slow in terms of an economic structural change (i.e., industrial employment and urbanization) and improvement in people’s welfare (poverty eradication or living standards upgrading) and wasteful regarding investment returns.

First, reliable indicators for progress in industrialization are the percentage of the workforce employed by the industrial sector and/or the degree of urbanization. The Maoist economy did not do very well in this aspect. This was determined by the basic fact that Mao’s modern industrial workforce was frozen below 70 million when China’s population was nearly doubled. The growth in Mao’s industrial workforce fell behind the growth of China’s population by 2.02% per year from 1949 to 1976. If Mao’s China had been able to maintain its level of growth in industrialization, by 1976 China’s industrial workforce should have been in the neighborhood of 125 million to keep up with the population increase per se. Should a high degree of industrialization be attempted, China’s industrial workforce ought to be greater than 125 million by 1976. China’s real structural change had to wait until Deng Xiaoping’s reforms.

The other face of the same coin was urbanization, which shows the same pattern: It was also frozen under Mao’s rule. China’s urban residence under Mao’s rule grew pathetically 0.3% a year, slower than China’s population growth of 2.02% a year (Liu & Yeh, 1965, p. 212; National Bureau of Statistics, 2003, p. 97; Zhong, 2002, pp. 224, 242). A breakthrough only occurred after Deng Xiaoping’s reforms.

In both cases, the growth rates of industrialization and urbanization did not speed up but rather slowed down. This can be defined as de-industrialization and de-urbanization. In addition, Mao’s government introduced in 1958 strict residence control, known as Residence Registration (huko), to prevent city-bound migration and social mobility, which was reinforced by housing and food rationing. Thus de-industrialization and de-urbanization were institutionalized, with the best case being the forced ruralization (shangshan xiaxiang) of 16 million urban youngsters in the countryside in the 1960s and 1970s (Zhang & Su, 2000, vol. 2, p. 890). Consequently, by 1976, when Mao died, China’s economy still maintained a distinctive premodern structure with at least 77% of its workforce in the agricultural sector (Ling, 1997, p. 102; National Bureau of Statistics, 2003, p. 34), not too different from Meiji Japan in 1872 (at 72%) or Tsarist Russia in 1914 (at 75%), and even higher than colonial India in 1901 (at 65%) (Davies, Harrison, & Wheatcroft, 1994, p. 112; Gregory, 1994, pp. 21, 42; Maitra, 1991, pp. 101, 132; Minami, 1986, p. 29).

Another problem is how to treat the very high industrial GDP, allegedly as high as 48.6% of China’s total (as of 1978) (National Bureau of Statistics, 1983, p. 24), in Mao’s time. If true, China should have been more industrialized than any country in the world because, during industrial take-off, Japan’s industrial GDP was about 20% of its total GDP (in the 1920s), India’s industrial GDP was about 22% of its total GDP (in the 1960s); later, G7 countries’ industrial GDP was about 26% of their total GDP (in the 1990s) and developing economies’ industrial GDP was about 28% of their total GDP (also in the 1990s) (Lal, 1988, vol. 1, pp. 126–127; Ray, 1979, p. 17; Rothermund, 1993, p. 177). So the supra-high industrial GDP share under Mao’s rule cannot be verified unless, that is, China possessed the most productive industrial workforce in the world to compensate for the small size. But so far there has been no evidence to support that scenario. This leaves one explanation: Mao’s industrial GDP was artificially inflated to leap the country’s achievement forward.

Second, people’s welfare deteriorated. Urban workers’ real wages were reduced by half (see Table 12). The privileged urban sector has always been better paid than its rural counterpart due to “scissors pricing differentiation” in favor of cities.39

Table 12. Average Annual Nominal and Real Wages in the State Sector, in Yuan, 1957–1978


Nominal wage


Real wage (1957 price)*






















Source: Lippit (1987, p. 150).

Note: *Conversion is based on the average inflation rate of 2.01% per year for the period of 1950 to 1978, see Li (1997, pp. 49–51).

Unlike their urban counterparts, farmers, all wage-laborers under Mao’s rule, received “wage goods” in the form of rationed food and petty cash. In a 1978 national survey, 97% of rural workers’ cash wages were between 36 and 72 yuan a year (Ling, 1997, pp. 102–103). China’s national Engel’s coefficient under Mao increased to 0.7 (He, 1994, p. 8), significantly worse from the previous below 0.6 during the 1920s and 1930s across six northern provinces and cities like Shanghai, Tianjin, and Wuhan (Bureau of Social Affairs of Shanghai, 1932, p. 18; Li, Xia, & Huang, 2005, vol. 1, pp. 25, 26, 358; vol. 2, pp. 2, pp. 758, 827, 1225), and comparable with Britain, Japan, and India at the time (Hanley, 1997, p. 171; Li et al., 2005, vol. 1, pp. 273, 359). Then, in 1978, on average, urban waged workers would spend 450 yuan on food (Spending α‎) and 193 yuan on other commodities (Spending β‎). To show the urban–rural income gap, given that rural waged workers received food (Spending α‎) as part of their pay, and their Spending β‎ was 36 and 72 yuan, the rural cash-equivalent total wage (Spending α‎ plus Spending β‎) in 1978 was 120 to 240 yuan, which was 18.5% to 37.0% of what their urban comrades were paid, not counting the different treatment between the two sectors in terms of welfare provision: state-run schools and medical care benefitted exclusively the urban population.

Even so, 70% of urban wages did not buy people a lot of food. Daily consumption of the urban residents was administratively controlled at the subsistent level of 2,009 kilocalories a day, of which 1,750 came from cereals (accounting for 83% of all energy, which is qualified as a famine diet) (Croll, 1983, p. 211). The rationed amounts were frozen even for the privileged urban sector. Table 13 shows the details.

Table 13. Urban Food-Rationing, Cereals in Kilogram per Month per Capita, 1955–1979








0–3 years of age





10+ years of age





University students





Office clerks





Heavy physical workers





Sources: Liu and Yeh (1965, pp. 48–50); Croll (1983, pp. 118, 211).

Note: The upper band of 22.5 kilograms of cereals a month (for heavy physical workers) provides 2,625 kilocalories a day while 14.0 kilograms of cereals a month (for clerks), 1,519 kilocalories a day.

The remaining 259 kilocalories daily ration (27% of all energy) came from the following non-grain rations per capita for each calendar month (also in 1978) (Ling, 1997, p. 101):





Bean noodles






For the rural sector, the official annual ration for an adult was set at 360 catties for the north (180 kg, in wheat, millet, maize, sorghum, and so forth) and 400 catties for the south (200 kg, in rice) (Croll, 1983, p. 80). All rural ration was in raw grain. Wheat loses 20% and rice loses 30% to milling and husking (Gao, 2006, p. 5). So a rural adult was granted 140 to 144 kilograms edible cereal per year, which amounts to a mere 1,300 kilocalories per day. The rural food ration was also fixed even during bumper harvests (Gao, 2006, p. 73). Shortage of food made family plots (ziliu di) a lifeline for the peasantry.

In this context, China’s population was impoverished under the Soviet system. It becomes obvious when one compares Mao’s economy with that of post-Mao’s (see Table 14).

Table 14. Households Below the Official Poverty Line (% in Total), 1978 Versus 1988



China’s total

49.3 (100)

15.9 (32)

Rural sector

65.1 (100)

15.7 (24)

Source: Chen (2000, pp. 132–133).

One naturally asks where China’s surplus and investment went and how it functioned, so vital for China’s industrial expansion (if at all). It was well documented that Mao’s economic planners reinvested continuously a quarter of China’s annual GDP year in and year out (mainly in heavy industry). It was also known that one yuan capital investment brought in one yuan GDP in 1957 (Ministry of Finance, 1997, p. 479; National Bureau of Statistics, 2002, p. 51). Hence, each round of reinvestment would increase China’s GDP by a quarter, of which a quarter became new capital, ceteris paribus. Then, after 20 years of repeated reinvestment (1957 to 1977), China’s capital stock should have grown 86-fold. China’s total capital asset in 1957 is believed to be 120.8 billion yuan (1952 constant price) (Lei, 2009, p. 78). In 1977, China’s total capital asset should have been 10,388 billion yuan (also in 1952 constant price). The harsh reality is that in 1977 China’s total capital asset was a mere 5,695 billion yuan (1952 constant price), 45% short of the “ideal scenario.” The gap, or 45%, was the amount that was wasted by the Soviet system. The post-Mao official view in the 1980s tell us (Yu, 1984): “A high rate of accumulation and large-scale capital construction alone cannot bring about sustained fast growth and good economic result. . . . [Excessive capital formation] is neither feasible nor well planned” (p. 458).

This wasteful practice went from bad to worse, as it was announced in 1978 by Premier Hua Guofeng (1921–2008) that “From 1974 to 1976, . . . we lost 100 billion yuan in industrial GDP, 28 million tons of steel, and 40 billion yuan of fiscal revenue. Our entire economy was on the brink of collapse” (Hua, 1978). The Cultural Revolution cost China 800 billion RMB yuan (Jiang, 1998, p. 3), equivalent to China’s total capital stock of the state-owned enterprises in 1979.40 Not surprisingly, China’s per capita GDP was merely US$190 in 1976 (World Bank, 2018), and China was among the very poorest countries in the world, simply because not enough wealth was generated by the Maoist system.

All the reliable evidence indicates that despite numerous showy “five-year plans,” the growth performance under Mao’s rule entered a cul-de-sac of low industrialization and urbanization but high waste, destruction, and universal poverty. The Maoist economy was in deep crisis, and the legitimacy of Mao’s party-state was in jeopardy. Littered with brutality, irrationality, and mismanagement, the Maoist period was marked a state failure too.

Third Landmark, 1977–Present

Mao’s zealous adoption of “Russian (Soviet) ideology as the foundation and Russian (Soviet) learning for utility” was a failure. Evidently, his foolhardy approach did not make China industrialized and urbanized. Rather, it was responsible for wasteful investment, a large-scale manmade famine, and universal poverty. If anything, these were the opposites of what the communists promised to eliminate in 1949. Therefore, the top-down “Soviet learning as the foundation and for utility” was a liability for the Chinese population instead of an asset.

Opportunities for China to change finally came in 1976 when Mao died. But desires for changes to take place can be traced back to the early 1960s when the manmade famine hit China hard. Unfortunately, the leadership of reformers under President Liu Shaoqi (1898–1969) was ruthlessly purged by Mao. After Mao’s death, the reformers, headed by Deng Xiaoping (1904–1997), a close ally of President Liu Shaoqi in the 1960s, finally took power in China. The path they chose was “Russian (Soviet) ideology as the foundation and Western learning for utility,” meaning that the party-state political system would remain intact but the Western market and technology were welcome. Deng Xiaoping called it “socialism with Chinese characteristics” by opening China to the world again. Despite the alleged pragmatism known as “groping rocks to cross a river” (mozhe shitou guohe), this is a reincarnation of the earlier “Chinese ideology as the foundation and Western learning for utility.” To a great extent, China had been there and done that in the period of 1850–1949. Hence, Deng’s reforms can be regarded as China’s Second Westernization Movement.

Moreover, for the first time, a paramount communist leader declared war on poverty instead of “class enemies.” To make sure his message was getting through, Deng announced in 1980 that “Modernisation is the key to all our solutions to internal and external problems [associated with Maoism]. By the end of this century, we must try our best to reach a GDP at 1,000 American Dollars per head and live a reasonably comfortable life [xiaokang]” ((Li & Zheng, 1993, p. 14).

The reforms started with the dismantle of Mao’s institutions, including in the 1980s over 400 pieces of anti-market laws and regulations (Ma, 2008, p. 163). The private sector was allowed to operate and became once again the main engine of growth and development. China’s agriculture became de facto private after 1978. In the urban sector, by 1992, the state’s share in China’s industrial GDP had dropped under 50% (Ma & Sun, 1993, pp. 39, 271), and its share of the workforce in China’s total had declined to 10% by 2000 (National Bureau of Statistics, 2003, p. 126). Meanwhile, 70% of China’s industrial GDP came from non-state firms (National Bureau of Statistics, 2003, p. 461).

With its uninterrupted GDP growth at or near 10% a year, a spectacular economic boom transformed China from a closed agrarian economy to an open and export-oriented one.41 Much of such growth during the 1980s and 1990s redeemed all the developmental deficits caused by the Maoist mismanagement. After 2000, China was set to catch up with some A-listers of fast growth after World War II: In 2009, China replaced Germany as the largest exporter of the world. A year later, it replaced Japan as the second largest economy in the world. China also boasts foreign exchange reserves worth US$3.3 trillion, the highest in the world in 2012 (Anonymous, 2014a). In 2011, China topped the world league table in as many as 220 industrial outputs (“Tongji Shuju,” 2019) and became the “workshop of the world.”

Moreover, China’s economic structure had begun to look modern for the first time in its history (Table 15).

Table 15. China’s Economic Structure, % in Total, 2017

Population share

Employment share

GDP share

















Source: World Bank (2018).

Note: I = Agriculture; II = Industry; III = Service.

Furthermore, in 2001 China’s per capita income passed the US$1,000 mark, compared its meager US$190 in 1976 (and continued to grow to US$8,690 in 2017) (World Bank, 2018). In purchase power parity, China’s per capita income was US$4,990 in 1999 (World Bank, 2005, pp. 255, 256). As a result, the World Bank has identified 1999 as the time when China became a “low middle income country” (World Bank, 2000, pp. i–ii; 2002, pp. i–ii; see also World Bank, 2001, p. 271). Poverty head-count decreased steadily from over 50% to below 10% of China’s total population from 1981 to 2010. In absolute terms, rural people living in poverty dropped from over 200 million to less than 30 million (Anonymous, 2014b). China’s life expectancy at birth increased from 64.6 years in 1976 to 76.3 years in 2016 (“Life Expectancy,” 2018). China never had it so good. Deng’s mission was well accomplished.42

Yet, Deng’s “China Model” with “Russian (Soviet) ideology as the foundation and Western learning for utility” does not exist without problems. The Chinese economy operates under a dual system made of a sector of state ownership plus a monopolized “commodity economy” (which is related to but not identical to a market economy) on the one hand and the other sector of private ownership plus a market economy on the other. The former controls some key resources such as land, minerals, energy, transport, communication, bank loans, and insurance and acts as a permanent price-giver, and the latter has to put up with excessive prices and administrative shackles for those resources as a permanent price-taker in unfair commodity exchanges. This rent-seeking arrangement conveniently supports the burdensome, moribund state sector indefinitely. Second, the blind belief in GDP growth, or “GDP fetish,” has created new incentives with which bureaucrats’ promotions depend heavily on an increase of GDP (often wasteful and sometimes only on the books) in their constituencies regardless of the factor inputs or externalities (such as ghost-town construction, land speculations, inflation, heavy indebtedness, excessive labor exploitation, and irreversible environmental damages). Third, with the state monopoly over key resources, individual officials who have easy access to lucrative resources are prone to corruption, which has now widely spread in society. Fourth, the economy is distorted with an overheating housing market, side by side with a fast cooling manufacturing sector, low-income masses with limited purchasing power versus industrial overproduction, not to mention the income gaps between social classes, economic sectors, and geographic regions. Finally, despite the celebrated poverty alleviation efforts, inequality continues to accelerate (Zheng & Deng, 2018). As a result, China has become one of the least equal societies on earth.43

All such socioconomic ills are deeply rooted in the Soviet system. Therefore, more reforms are still the sine qua non, should China want to safeguard its precious fruit of post-Mao’s growth and development.


The period of 1850 to the present day has been a long and bumpy journey for China in terms of its institutions (including ideology) and economic growth. The process was one of trial and error. The two main features were (a) state-rebuilding from the late Qing withering status and (b) state-led growth toward economic modernity. The real breakthrough took place under Deng Xiaoping when China finally got both state-rebuilding and state-led growth right.

To demonstrate the dramatic changes after 1977, one can use 1.05% of GDP growth achieved by China over a long period from 1750 to 1936 as a benchmark, and then compare China’s real-time GDP with such a benchmark. The results are shown in Table 16. It is obvious that the economy underperformed all the way up until 1977 (Deng, 2015, ch. 7).

Table 16. China’s Long-Term GDP Performance


Historical benchmark (A)

Real-time growth (B)


















































Sources: Estimate for the 1830s at 3,603 million taels based on Liu (2009, pp. 144–155). Estimate for 1750 at 1,713 million taels, based on Feuerwerker (1984, p. 300). Estimate for 1880 at 3,500 million taels, based on Liu, Wang, and Zhao (1999, p. 66). Figures for 1914 and 1936 based on Liu and Wang (1996, p. 44). Figures for 1936 and 1952 based on Dong (1996, pp. 365–370); also see Liu and Yeh (1965, p. 67). Other figures are extracted from National Bureau of Statistics (1987, pp. 36, 43; 1989, p. 29; 2002, p. 51).

Note: All the post-1952 figures are at constant prices.

(a) Based on the fact that only 45.7% of China’s population was free from Japanese control or direct war between 1937 and 1945, while the old trade link with Manchuria and North China was aggressively severed from the rest of China after 1931; see Cao, 2001, vol. 6, pp. 293–296; South Manchuria Railway, 1936, p. 159; Japan-Manchoukuo Year Book Co., 1940, p. 797.

(b) The base year is 1952; the index is derived from –8.6% annual growth.

(c) The base year is 1952; the index is based on 2.8% annual growth.

However, the issue of sustainability of China’s fresh growth and sudden rise looms large due to the legacy of the Soviet institutions adopted in 1949, which have been outdated since 1976. China’ future depends as much on the removal of these institutions as what the Russians have done in the past three decades, so that the market economy is able to thrive to its full potential.


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(1.) Silk was monopolized by the Mongols as an international currency of the time. No Chinese were allowed to consume silk. Farmland after the first crop was used as an open field for Mongol herds.

(2.) The Mongol monetary system was completely paper-based with no central bank or bank reserves.

(3.) The best available evidence comes from a systematic survey in the early 1920s; see Buck (1937). Note here that John Buck did the best anyone could do in terms of scale and scope (which were clearly the greatest in East Asia) at the time when the economic survey was still in its infancy. In that regard, his survey data were as good as one could possible obtain for China during the 1920s.

(4.) To a great extent, the “high level equilibrium trap” indeed captured China’s economic reality until around 1860 when the Westernisation Movement (yangwu yundong) started. There were two factors to support Elvin’s trap: (a) lasting peace from 1700 to 1800 together with huge farming expansion in China’s northeast (i.e. Manchuria), due north (i.e., the “Big Bend” of the Yellow River in Mongolia), northwest (Qinghai and Xinjiang), and due west (Sichuan) led to a vigorous increase in China’s aggregate food output (likely to be over a one-third gain), and (b) the Qing population followed closely the windfall of food availability. By 1800, there was no large-scale famine across China. If one agrees with the California School (i.e., Kenneth Pomeranze), until 1800 the living standards in the affluent Yangzi Delta were on par with those in the lower countries in Europe. But after 1800, as the input of new farmland petered off and then stopped, the large standing population that kept on growing became a problem. Empire-wide social unrest (1850) and famines (post-1850) soon followed, meaning that the Qing population was finally caught by the growth trap defined by Elvin.

(5.) The justification of silver imports by China as a proxy for China’s manufacturing strength lies in the basic facts that (a) the Spanish Manila Galleon Trade (1565–1815) was solely devoted to the shipping of silver coins from Mexico to East Asia via Manila and (b) China exported mainly its manufactures (porcelain, textiles, paper, metal utensils, and so forth) in exchange for the imported silver. If this is true, the steady increase of silver influx roughly represented China’s increase in domestic manufacturing capacity.

(6.) The year 1571 has been recognized as the year when the first recorded commercial shipment of silver from the West arrived in China (see Flynn & Giráldez, 2002). However, von Glahn (1996, p. 140) sets the commencing date back as early as 1550.

(7.) There is no synchronized time period for silver output. The 90,000 tons is based on a total output of 300 tons per annum during the 17th century (see Attman, 1986, p. 78). Garner (1988, p. 900) took a slice of the silver production period (200 years) and ended with a figure of 71,550 tons (derived from 3 billion pesos). But in real terms, Garner’s total output is likely to be 107,325 tons for the entire 300 years. Barrett (1990, p. 236) estimated 150,000 tons. Based on archival records, the most reliable sum is undoubtedly Soetbeer’s (1879) 145,410 tons from Brazil, Mexico, Peru, Potosi, and Chile. However, Soetbeer’s data are for a later period of 1521–1875 (see Soetbeer, 1879, pp. 60, 70, 79, 82–83, 92 and Table 1). Nevertheless, Soetbeer’s data largely confirm Barrett’s estimates (150,000 tons).

(8.) The cohong system was one of “Imperial Charted Trading Houses” by government appointment. The operators of the cohong were wealthy and well-connected Chinese merchants who acted on behalf of the Chinese state in hosting, trading, and taxing all incoming foreign traders. The basis of the cohong was in Port Huangpu in Canton (hence the term “Canton-cohong”), over 100 kilometers inland from the nearest estuary and protected by a string of forts armed with heavy cannons.

(9.) He obtained his work permit to stay in Beijing as a clock-repairing artisan, not as a Jesuit missionary; see Li, 1983, p. 582. Ricci was mentioned in the official history of Ming Shi (The History of the Ming Dynasty); see Zhang, 1974, Entry “Biography 214, Foreign 7.” However, Ricci was by no means the first foreigner to come to China on a religious mission. The Buddhist Monk Bodhidharma (?–536 ad) came from India to China in 527 ad and left the lasting legacy of the Shaolin Temple. Later, in 651 ad, Sa`d ibn Abī Waqqās came to China on a religious and diplomatic double mission, which ushered in the spread of Islam.

(10.) Diego de Pantoja, a Spainaird, is believed to have accompanied Ricci to Beijing to work for the Ming government.

(11.) Sabbathin de Ursis, an Italian, first came to China in 1606 under the recommendation of Matteo Ricci. He succeeded Ricci in 1611 in taking charge of the Imperial calendar project.

(12.) Johannes Schreck, a German, first came to Macao in 1619, entered China in 1621, and reached Beijing in 1623. He died during his post as Officer of the Ming Imperial Observatory working on the Daming Chongzhen Lishu (Ming Imperial Almanac).

(13.) Von Bell, a German, came to China in 1622. He was the successor of Johannes Schreck by the invitation of the then Ming Premier Xu Guanqi in 1630. In 1623 he took advantage of repairing a piano for Emperor Chongzhen to try, unsuccessfully, to persuade the emperor to convert to Christianity. Eventually he was appointed the Director of the Imperial Observatory (钦天监正‎), reaching the very top of the bureaucratic ladder as Official of the First Rank Proper (正一品‎).

(14.) Nicolas Longobardi, an Italian, was another successor of Matteo Ricci. It remains unclear when he first entered China. Jacques Rho, an Italian, first came to China in 1624. He was invited to Beijing in 1630 to join the Ming Imperial Observatory.

(15.) Ferdinand Verbiest, a Belgian, entered China in 1659. He was involved in the Qing firearms design in 1675. Like von Bell, Verbiest was appointed the post of Director of the Imperial Observatory in 1669. He supervised the construction of six new instruments for the observatory from 1670 to 1674: a zodiac armillary sphere, an equatorial armillary sphere, two altazimuths, a quadrant, and a celestial globe. His biography is included in Zhao, 1986, “Biography 59.”

(16.) Thoma Pereira, a Portuguese, came to China in 1672. He worked in the Imperial Observatory in the 1670s and 1680s. He worked for the Qing as one of the official translators and interpreters for the 1689 Sino-Russian Treaty of Nerchinsk. He did all he could to protect China’s interests against the Russian attempt to encroach its territory. Incidentally, the treaty has been commonly regarded as an equal and fair treaty for China, very rare during Qing history.

(17.) Philippus Maria Grimaldi, an Italian, was the successor of Ferdinand Verbiest to work for the Imperial Observatory.

(18.) Joachim Bouvet, a Frenchman, first arrived in China in 1688 and was employed by the Qing state from 1707 to 1717 to map the entire Qing Empire with the European technology of cartography.

(19.) Jean Francois Gerbillon, a French Jesuit, also arrived in China in 1688 and was employed by the Qing court in 1689 as an official interpreter and translator for the Sino-Russian Treaty of Nerchinsk.

(20.) Bernard-Kiliam Stumpf, a German, was employed by Emperor Kangxi in 1696 to build China’s first glass-making factory. He joined the Qing Imperial Observatory in 1715 and was responsible for building a European-style theodolite.

(21.) Joseph Giusepp Castiglione, an Italian, arrived in China in 1715 and was employed almost immediately as the court artist for 50 years until the end of his life. He held the post of Official of the Third Rank (三品‎) of the Qing.

(22.) Ignatius Koegler, a German, arrived in China in 1716 and reached Beijing in 1717 to take up his position in the Imperial Observatory. He was promoted to Director of the Imperial Observatory (钦天监正‎) in 1725.

(23.) Andre Pereira, a Portuguese, worked in the capacity of Deputy Director of the Imperial Observatory alongside Koegler.

(24.) Augustin de Hallerstein, an Austro-Hungarian, was the successor of Ignatius Koegler in charge of the Imperial Observatory.

(25.) By 1844, there were about 240,000 Roman Catholics, a mere 0.06% of China’s population of the time; see Latourette, 1929, p. 83.

(26.) This is to use the 1920s’ figure of 1.4 million square miles as a proxy; see Buck, 1937, p. 30.

(27.) This includes 402 county equivalent units; see Zhao, 1986, vol. 11, pp. 9071–9131.

(28.) They are often translated into “seeing no evil,” which is not accurate, because “evil” suggests that bad things have already been done.

(29.) Later, Zhu Xi (1130–1200 ad), the founder of neo-Confucianism, interpreted ren as what separates human beings from the animal kingdom in a package of benevolence, righteousness, etiquette, and intelligence (ren yi li zhi); see Zhu, c. 1200 ad, vol. 4; also Taylor, 1978, pp. 101–134.

(30.) According to field work in the 1920s, a village council was able to force a wrongdoer to leave for 10 to 20 years or even for life; see Kulp, 1925, p. 49.

(31.) It is assumed here that 90% of the Qing population (hence 359 million in 1833) was rural, living in 2,074 counties.

(32.) According to Chung-li Chang’s numbers, however, officials no more than 23,000; see Chang, 1962, pp. 42, 197, 329–330.

(33.) After 1882, Fengtian, Jilin, Heilongjiang, Xinjiang, and Taiwan became full provinces. Also, if all the 402 county-equivalent units are counted, there were 2,074 counties; see Zhao, 1986, vol. 11, pp. 9071–9131; Yang, 1992, pp. 420–421.

(34.) The number is often said to be about 1 million; see Zhao, 1986, vol. 11, pp. 9305–9307.

(35.) Calculation is based population density persons/km2; Shanxi, Henan, and Hubei were affected by the 1876–1880 drought. Here, a minimum 30% is added to exclude the effect of the drought. See Cao, 2001, vol. 5, pp. 600–601, 635, 709, 711–717.

(36.) For a lower account at 109.8 million taels, see Zhao, 1986, vol. 11, p. 9283.

(37.) This is higher than previous estimates of 422.3 million, 626.9 million, and 850 million; see Zhou, 2000, pp. 151–153.

(38.) The 1911 Rebellion in Wuchang along the Yangzi River did not end the Qing monarchy. Rather, it was a petition of a group military commanders to the throne in Beijing that forced the abdication of the last emperor.

(39.) Scissor pricing was a state policy that manipulated the terms of trade between the industrial and agricultural sectors by inflating prices of industrial goods and understating prices of agricultural goods for unequal exchange between the two sectors; see Knight, 1995.

(40.) For China’s 1953 GDP, see National Bureau of Statistics, 2002, p. 51. For the state-owned assets, see Xi and Jin, 1996, pp. 349, 352.

(41.) In terms of China’s economic orientation, in 2006, 67% of China’s GDP was related to export; in 2011 it still remained 51% after some drastic changes after the 2008 global financial crisis; see “2011 Zhongguo Waimao Yicundu,” 2019.

(42.) Of course, there have been alarming negative externalities associated with Deng’s reforms, ranging from environmental degradation to official corruption and social inequality. These problems present huge challenges to China for years to come.

(43.) China’s Gini coefficient was consistently very high and has reached 0.46 in the 2010s; see United Nations Development Programme, 2019; Central Intelligence Agency, 2019.