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The Grandeur of the Qing Economy (Part 2)

The Qianlong Emperor's Southern Inspection Tour, Scroll Six: Entering Suzhou along the Grand Canal. The court painter Xu Yang, a native of Suzhou, was commissioned by the Qianlong emperor (r. 1736–95) to record in twelve monumental handscrolls the emperor's historic 1751 tour of south China. This scroll, the longest of the twelve, chronicles the lavish pageantry of the emperor's arrival in Suzhou. (Photo: The Metropolitan Museum of Art)

By Madeleine Zelin

April 15, 2026
7:34 pm
Los Angeles, CA

Importance of the Grand Canal in Trade within China To a certain extent, the Qing state itself facilitated the movement of goods to market by locating Beijing, its capital, far to the north, away from the rich and prosperous rice growing areas of Southern China. This resulted in a natural market for the demand of goods in the North, if for no other reason than to feed the imperial household and court. This was one of the reasons why it was so important to keep the Grand Canal working. The Grand Canal was a major conduit for grain, salt, and other important commodities. Any taxes that were paid in kind were paid in grain, which was shipped along the Grand Canal. Thus, control of the Grand Canal was of

Importance of the Grand Canal in Trade within China

To a certain extent, the Qing state itself facilitated the movement of goods to market by locating Beijing, its capital, far to the north, away from the rich and prosperous rice growing areas of Southern China. This resulted in a natural market for the demand of goods in the North, if for no other reason than to feed the imperial household and court. This was one of the reasons why it was so important to keep the Grand Canal working. The Grand Canal was a major conduit for grain, salt, and other important commodities. Any taxes that were paid in kind were paid in grain, which was shipped along the Grand Canal. Thus, control of the Grand Canal was of critical importance to the Qing government.

Map of the Grand Canal, before 1855. Before 1855 the Yellow River flowed south of the Shandong peninsula and into the Huai River

Addressing Three Misconceptions About the Qing Economy

1. State Control of the Economy

A major misconception about the relationship between the Chinese state and the economy is that the state controlled economic activities with a heavy hand. But if one really looks at the size of the Chinese bureaucracy and the size of China throughout its history, whether in terms of the size of the territory or the size of the population, one can see that no Chinese state could have controlled economic activity completely. More importantly, as early as the Tang Dynasty in the 7th century, the state made the decision to withdraw from control of the economy, and thereafter the Chinese state was no longer determining where a market could or could not be established.

The Qing, a Laissez-Faire State?

In practice the Chinese state under the Qing took a relatively laissez-faire approach to the economy, and the state did not regulate trade. Indeed, the Chinese legal system, which was one of the most advanced and sophisticated legal systems in the world during this time, left the regulation of private matters largely to the people directly engaged in the economic exchange. With certain exceptions, the state set out specific parameters for economic activity, but it was mainly within the local economic communities, within the guilds and elsewhere, that Chinese customary law for the handling of economic affairs was emerging. The emerging rules, regulations, and customs of this time suited the needs of the people who were engaged in commerce.

An Exception: The State Monopoly on the Salt Trade

To a large extent the Qing state concerned itself only with the movement of a small number of goods that were seen as essential for life and were also a good source of revenue for state coffers. The most important of these was salt. But the state did not regulate how salt was manufactured; it only required a license for the transport of salt. Licensing for the transport of salt was an important source of the revenue for the Qing state.

Hereditary Occupations

By the Ming dynasty, the Chinese state had stopped trying to control what occupations people could have. This contrasts with Japan where, until the late 1800s, people were born into a hereditary status or occupational group and were expected to do what their fathers did. By the beginning of the Qing dynasty, the only truly hereditary occupation in China was the military, and most of the people involved in this system were attached to the ethnically Manchu military structures rather than to the ethnically Han Chinese military.

2. Silver in China and the World Economy

A government-designated shop where copper coins and small ingots of silver can be exchanged for larger ingots of silver to be used for paying taxes, from The Qianlong Emperor’s Southern Inspection Tour, Scroll Six: Entering Suzhou Along the Grand Canal

Those who would argue that China was not involved in the world economy by the Qing period have only to look at some of the consequences of China’s use of currency — both copper and silver. China under the Qing had an enormous unmet demand for silver. As the economy grew, the populace needed silver for transactions in the marketplace. As early as the 1720s, Mexican silver dollars were used in transactions in Southern China. Mexican silver had the advantage of already being in coin form and being reliable for its weight in silver, so that one did not have to go to a money changer to have him weigh the silver and take a fee for attaching a certificate. The Chinese government did not mint silver coins, so throughout this period people were using minted and raw silver coming into the country through the Philippines and other areas that were points of trade in the Southern China region. Western European nations during this time had very few commodities other than silver to sell to China in exchange for the tea, porcelain, and silk that were being imported to meet their own growing demand. Indeed, this inflow of silver from the West is one reason for the rapid expansion of China’s economy during the 18th century.

3. Creation of the “Canton System” in 1760

The notion that the Chinese government feared foreign traders and did not want foreign traders on its shores is a major misconception. Although foreign trade was not a dominant source of revenue for the imperial household, it was taxed at a number of ports along the Chinese coast and was an important source of revenue for the central government. It was not until the 1760s that China really began to limit foreign trade to the single port of Canton, and there is much speculation about why this happened. Some scholars have related this to Chinese awareness of the activities of the British East India Company in India in the 1750s, when Britain was effectively colonizing India, and the Chinese government’s fear of similar foreign encroachment on its own soil. Other scholars see the creation of the single port of call for European ships at Canton as being a mutual decision, because, in fact, Canton was the only port that really could provide the kind of facilities that foreign traders needed. Canton had a sufficient number of merchants, sufficient capital to be able to bring goods from the interior in sufficient amounts to make it worthwhile for foreigners to come all the way from England to China. The trip from England to China during this time was indeed very long, and ships only came once a year. The merchants bought everything they could to fill up the ships and soon set sail again.

Source: Columbia University