East Asian Economic History

Introduction and Instructions Imperial China and Economic Prosperity China, Europe, and Modernity Japan's Economies: 1600-1945

Component Overview: East Asian Regionalism

Use of the term “Asia” has been seriously questioned for years. The area conventionally called the continent of Asia includes an enormous landmass and a much more heterogeneous collection of peoples than other continents. The landmass called Asia also includes island chains separated by large areas of water. Eurasia, commonly identified as a landmass that ranges from the Atlantic Ocean to the Pacific, and that includes what is known as Europe and Asia, is as logical a construct—if not more so—than the notion of Asia. East Asia, by contrast, has been a coherent region since prehistoric times. There is evidence of contact between the peoples of what are now China, Japan, and the Koreas since the Neolithic period. Just as importantly, the people of East Asia shared the first common written language in existence in the region based on Chinese characters.

For most of the timeframe encompassed in this topic, Imperial China’s technology and economy dwarfed both other regional civilizations and the rest of the world. However, by the seventeenth century, Japan was well on its way to developing a vibrant commercial sector that was later augmented by a small manufacturing sector even before mid-nineteenth century Western encroachment. By the latter half of the nineteenth century, Japan’s general economic development had eclipsed that of China. By the first decade of the twentieth century, Japan ascended to the ranks of Western industrialized countries, as it became a world power.

Although in East Asia’s early history, kingdoms on the Korean peninsula such as Silla and Koryo were more economically advanced than Japan, by the seventeenth century economic development on the peninsula lagged behind the other two major regional civilizations. Economic developments on the peninsula are included in future components.

The following lessons are offered as “snapshots” that hopefully better enable educators to gain some understanding of the economic histories of Imperial China and Japan until 1945. The importance of incentives, trade, technology, political and legal institutions, and investment in human capital in contributing to economic prosperity are also accentuated in this component.

Imperial China, and Economic Prosperity

The more prohibitions there are, the poorer the people will be (Lao Tzu, Sixth Century BCE).

In 1500, at the dawn of Europe’s age of exploration, China had absolutely no incentive to “discover” new trade routes to Europe. Despite periods of dislocation and foreign conquest, the Chinese enjoyed what was probably the world’s richest economy for many of the years ranging from the Han Dynasty (202 BCE-220 CE until approximately the mid-eighteenth century. Although China, like other civilizations before the Industrial Revolution, was primarily an agricultural society, the empire was a world leader in technology and enjoyed a vibrant commercial sector, some manufacturing, and domestic and international trade. China’s trade surplus with Europe lasted well into the nineteenth century. The primary reasons behind China’s wealth were political and legal systems that generally supported, although sometimes unintentionally, economic freedom and a culture of entrepreneurship and innovation.

Imperial Chinese institutions, beginning with the Han Dynasty, were undergirded by a combination of three belief systems, Legalism, Confucianism, and Daoism. Each had substantial components that helped to facilitate economic growth. Legalists believed that people acted from self-interest so rulers should systematically promulgate laws that tie individual self-interest to societal progress. This meant the creation of a legal framework that often rewarded wealth acquisition and curtailed overly ambitious government bureaucrats from exceeding their authority regarding tax collection and private sector regulation.

Beginning with the Han dynasty, Confucianism gained favor among political elites. By the Song Dynasties, (960-1279) it formed the basis of China’s educational system. Mastery of rigorous Confucian-based examinations, rather than birth, was the key to top positions in the Chinese bureaucracy by the millennium, ridding the empire from feudalism 400 to 500 years earlier than Europe, thus expanding labor market freedom. Scholars and bureaucrats advocated individual ethics, self-responsibility, self-cultivation, and small but effective government bureaucracy. Although Confucian officials disdained merchants as parasites, they also recognized their social usefulness and usually left them alone. The Confucian officials competently administered a state that generally kept taxes low, maintained a grand canal linking China’s two great maritime commercial arteries, the Yellow and Yangzi Rivers, and for much of China’s history secured the famous Silk Roads that linked Chinese traders with Central Asia, India, and the Mediterranean.

Ideas similar to what centuries afterward would be associated in the West with classical liberalism, and later, libertarianism, are evident in Daoism, the third great Chinese belief system. The major Daoist idea that it is usually better for society if rulers stand aside and let humans get on with the daily business of living often facilitated economic prosperity in imperial China.

The institutional-legal structures described above were fully in place by the middle of the Song dynasty and lasted for the next several hundred years. Despite dislocations and even foreign conquest, the Chinese economy prospered. Large agricultural surpluses were generated through technology and genetically resistant seeds that in turn created rapidly expanding food supplies and markets. With the discovery of Mexico and Peru’s silver mines in the sixteenth century, China became the world’s largest importer of the precious metal. Silver imports fueled even more economic expansion. The Chinese exported vast quantities of tea, porcelain, and silk to Europeans. Domestically, through local markets or major distributors who used the Grand Canal to transport food nationally, agricultural productivity advances meant that small farmers in the south’s “rice bowl” were able to feed their families, pay taxes, and still market an average of 40 percent of annual yields.

 In addition to the absence of a feudal system, long-term de facto property rights also enabled many Chinese farmers, especially in the south, to prosper. Although theoretically the emperor owned all land, the institutional structures described earlier acted as a powerful check on arbitrary imperial power, and farmers were left alone so they could insure that the nation had enough to eat. Even though China’s economy was agrarian-based with products like tea and silk, industries such as iron, shipbuilding, salt, and porcelain flourished. The government controlled sales of a few industries such as salt, but most manufacturing was less regulated. Imperial Chinese cities featured vibrant commercial activity. By 1700, there was an elaborate system of remittance banks that provided capital for merchants. Merchants deposited cash in one locale, received a remittance certificate, and used it in another part of the empire as payment for transactions.

In the nineteenth century, several factors weakened China’s economy, including prejudice by the elite class against science and technology, a growing population problem, the Taiping Rebellion that dwarfed the American Civil War, and European encroachment. In 1911, the imperial era ended. While imperial China is included in every world history textbook, explanations of the economic activity behind the wealth are largely non-existent.

Questions

Please address both of the following questions in 150 to 200 word answers.

1. If the above reading changed any of your existing or prior perceptions about imperial China, please elaborate upon how this might change the way you teach about China.

2. Enlightenment thinkers such as Voltaire, the French Physiocrats, Benjamin Franklin, and Thomas Jefferson all admired aspects of imperial China. Does this reading provide any clues about why seminal figures in a Western intellectual movement that emphasizes the power of reason would admire imperial China? If you discern clues, please briefly discuss a few examples.

Sources and Further Optional Resources

The short essay in this lesson is an adaptation of a portion of Lucien Ellington’s chapter, “Integrating Economic Thinking into History” in Mark Schug and William Woods eds. Teaching Economics in Troubled Times: Theory and Practice for Secondary Social Studies, (forthcoming) Routledge Press, 2010.