Song Dynasty - Economy, Industry, and Trade

Economy, Industry, and Trade

The economy of the Song Dynasty was one of the most prosperous and advanced economies in the medieval world. Song Chinese invested their funds in joint stock companies and in multiple sailing vessels at a time when monetary gain was assured from the vigorous overseas trade and domestic trade along the Grand Canal and Yangzi River. Prominent merchant families and private businesses were allowed to occupy industries that were not already government-operated monopolies. Both private and government-controlled industries met the needs of a growing Chinese population in the Song. Both artisans and merchants formed guilds which the state had to deal with when assessing taxes, requisitioning goods, and setting standard worker's wages and prices on goods.

The iron industry was pursued by both private entrepreneurs who owned their own smelters as well as government-supervised smelting facilities. The Song economy was stable enough to produce over a hundred million kilograms (over two hundred million pounds) of iron product a year. Large-scale deforestation in China would have continued if not for the 11th century innovation of the use of coal instead of charcoal in blast furnaces for smelting cast iron. Much of this iron was reserved for military use in crafting weapons and armoring troops, but some was used to fashion the many iron products needed to fill the demands of the growing domestic market. The iron trade within China was furthered by the building of new canals which aided the flow of iron products from production centers to the large market found in the capital city.

The annual output of minted copper currency in 1085 alone reached roughly six billion coins. The most notable advancement in the Song economy was the establishment of the world's first government issued paper-printed money, known as Jiaozi (see also Huizi). For the printing of paper money alone, the Song court established several government-run factories in the cities of Huizhou, Chengdu, Hangzhou, and Anqi. The size of the workforce employed in paper money factories was large; it was recorded in 1175 that the factory at Hangzhou employed more than a thousand workers a day.

The economic power of Song China heavily influenced foreign economies abroad. The Moroccan geographer al-Idrisi wrote in 1154 of the prowess of Chinese merchant ships in the Indian Ocean and of their annual voyages that brought iron, swords, silk, velvet, porcelain, and various textiles to places such as Aden (Yemen), the Indus River, and the Euphrates in modern-day Iraq. Foreigners, in turn, had an impact on the Chinese economy. For example, many West Asian and Central Asian Muslims went to China to trade, becoming a preeminent force in the import and export industry, while some were even appointed as officers supervising economic affairs. Sea trade with the Southeast Pacific, the Hindu world, the Islamic world, and the East African world brought merchants great fortune and spurred an enormous growth in the shipbuilding industry of Song-era Fujian province. However, there was risk involved in such long overseas ventures. It was to reduce the risk of losing money on maritime trade missions abroad that, as the historians Ebrey, Walthall, and Palais write:

investors usually divided their investment among many ships, and each ship had many investors behind it. One observer thought eagerness to invest in overseas trade was leading to an outflow of copper cash. He wrote, 'People along the coast are on intimate terms with the merchants who engage in overseas trade, either because they are fellow-countrymen or personal acquaintances.... money to take with them on their ships for purchase and return conveyance of foreign goods. They invest from ten to a hundred strings of cash, and regularly make profits of several hundred percent'.