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Government as an Obstacle to Industrialization: The Case of Nineteenth-Century China

Published online by Cambridge University Press:  03 February 2011

Dwight H. Perkins
Dwight H. Perkins
Affiliation:
Harvard University
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Extract

Few generalizations find wider acceptance among specialists onChina than that which holds that the Chinese Imperial Government was hostile to commerce and industry and that this hostility was a major element in the country's failure to achieve modern economic growth. There is, of course, an important element of truth in this generalization, but analysis of the issues involved has generally suffered from a failure to make clear just what it was that the Chinese government in the nineteenth century should have done to promote development.

Type
Obstacles to Economic Growth: Papers presented at the Twenty-Seventh Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 27 , Issue 4 , December 1967 , pp. 478 - 492
Copyright
Copyright © The Economic History Association 1967

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References

1 This analysis of attitudes toward commerce has benefited from the reading of an unpublished paper by Thomas G. Rawski, The Role of the Chinese Merchant Community in Treaty Port Commerce, 1860–1875.

2 Ho, Ping-ti, The Ladder of Success in Imperial China (New York: Columbia University Press, 1962), p. 82.Google Scholar

3 Chang, Chung-li, The Income of the Chinese Gentry (Seattle: University of Washington Press, 1962), p. 327.Google Scholar

4 Metzger, Thomas, “Ch'ing Commercial Policy,” Ch'ing-shih wen-t'i, February 1966, p. 4. (mimeograph).Google Scholar

5 Yu-tung, Lo, Chung-kuo li-chin shih [A history of the likin tax in China] (Shanghai: Commercial Press, 1936), p. 62.Google Scholar

6 This statement assumes that the demand for commodities which paid taxes was price-inelastic. As most of these goods were basic necessities which were only a small percentage of the total consumer budget (e.g., salt and sugar) or luxuries which made, up a larger but still small portion of a typical gentry budget (e.g., silk and tea), this assumption should not be very controversial.

7 A good discussion of the various trade routes and the amount of legal and illegal trade in various areas can be found in Royal Asiatic Society, “Inland Communications in China,” in Chinese Economic and Social Life, pp. 15, 18, 20–21, 27, 30, 56, 104, 118, and 157.

8 Foreign goods, after all, did pay a 5 per cent ad valorem import duty. In addition, many foreign goods did not have any domestic competition at all. Cotton textiles, the most important foreign import in the late nineteenth century, did have domestic competition. Much of this competition, however, was from producers who paid no likin tax in any case (because their commodities didn't enter long-distance commerce). As for those producers of textiles who did pay the transit tax, their inability to compete over the long run resulted from the greater production efficiency of the modern plants (Chinese even more than foreign).

9 For example, Chinese sources for the nineteenth century and earlier are full of complaints about the burden of the land tax. Yet this tax on the average was at most 3 or 4 per cent of the value of farm output. For the way in which this percentage was arrived at, see my Six Centuries of Agricultural Development in China (1368–1967) (in process), ch. vii. Many of the taxes complained about represented rates near to or even below the average.

10 This discussion of the determining factors in China's domestic trade is based on a much longer analysis in ch. iv of my Six Centuries of Agricultural Development in China (1368–1967) (in process).

11 For a fuller discussion of the market town structure, see Skinner, G. William, “Marketing and Social Structure in Rural China,” Part I. Journal of Asian Studies, XXIV (11. 1964), 3–43CrossRefGoogle Scholar.

12 The figure “three-quarters” is a low estimate based on data for the twentieth century carried backward to the nineteenth century with the aid of a number of assumptions together with various estimates of long-distance trade in the nineteenth century.

13 This statement is based on the assumption that the price of grain where it was produced was 1.5 to 2.0 taels per 100 catties. Transport costs over land in such provinces as Shansi, Hopei, and Shantung were between 0.25 to 0.3 tael for 100 catties per 100 li (one li = 0.36 mile) (Source: Royal Asiatic Society, “Inland Communications in China,” Chinese Economic and Social Life, pp. 175–76).

14 Grain shipment data for various centuries can be found in numerous local gazetteers and memorials to the throne. See my Six Centuries of Agricultural Development in China (1368–1967) (in process), ch. v.

15 The trade percentage used here was derived from likin revenue and tax rate data in Lo Yu-tung. The provinces included are Shansi, Shensi, Honan, Shantung, and Hopei, The likin data are full of biases but they are adequate for the purpose to which they are put here.

16 To establish really that northern officials were more rapacious than those in the south would require a great deal of research into relevant documents. For what it is worth, one fairly astute Western observer in the 1840's stated that Peking was a particularly unattractive place for trade because of much greater official interference there, but this situation may have been because of the great concentration of officials in the capital (Martin, R. Montgomery, China: Political, Commercial and Socia. [London: John Madden, 1847], p. 107). There is also evidence that the route from Sian in Shensi Province was “dreadfully burdened with custom houses”Google Scholar (Royal Asiatic Society, “Inland Communications in China,” p. 30)Google Scholar.

17 According to Chung-li Chang, p. 327, gentry income per year in the late nineteenth century was about 675 million taels. According to my own estimates, total long distance trade (foreign and domestic) was valued at about 900 to 1,000 million taels (ch. iv of Six Centuries). If a quarter of gentry income was spent on goods in long-distance trade then gentry consumption together with the goods shipped out to pay for the gentry consumption goods would be valued at 350 million taels.

18 The figures are from Holland Hunter, “Transport in Soviet and Chinese Development,” Economic Development and Cultural Change, vol. xiv, no. 1, 10 1965, p. 81. The original source was A. L. Il'in and M. P. Voronicnev, Zheleznodo-rozhnyi transport Kitaiskoi nar. resGoogle Scholar.

19 For a discussion of Chinese trade in th e eleventh century see Etienne Balazs, “Une Carte Des Centres Commerciau x de la Chine” [A map of Chinese commercial centers], Annales: Economies Société Civilisations, October-December 1957, pp. 587–593.

20 Hirschmeier, Johannes, The Origins of Entrepreneurship in Meiji Japan (Cambridge: Harvard University Press, 1964), ch. i and pp. 248–49.CrossRefGoogle Scholar

21 Gross domestic product in 1933 prices was 30 billion yuan ( Liu, T. C. and Yeh, K. C., The Economy of the Chinese Mainland [Princeton: Princeton University Press, 1965], p. 66). Foreign trade price indexes, which generally moved with domestic prices, indicate that domestic prices in the 1890's were about 30 to40 per cent of prices in 1933. Gross domestic product thus becomes 9to 12 billion taels. Even if real product in th e 1890's were half the level of 1933, which is unlikely, the figure would become 4.5 to 6 billion taels. For price data I used the Nankai index numbers of foreign trade prices and J. L. Buck's data on prices paid and received by farmers (the latter only go back to 1906 for most regions)CrossRefGoogle Scholar.

22 I first became aware of the significance of the disparity in government revenues between China and Japan in discussions with Professor Albert Craig.

28 The standard work on the Tung Chih Restoration is that of Mary Wright, The Last Stand of Chinese Conservatism (Stanford: Stanford University Press, 1957).Google Scholar

24 See Tamagna, Frank M., Banking and Finance in China (New York: Institute of Pacific Relations, 1942), chs. i and iiiGoogle Scholar.

25 This discussion is based on the analysis of Albert Feuerwerker, China's Early Industrialization (Cambridge: Harvard University Press, 1958).Google Scholar

26 Hou, Chi-ming, Foreign Investment and Economic Development in China 1840–1937 (Cambridge: Harvard University Press, 1965), p. 216.CrossRefGoogle Scholar

27 Few Chinese, then or now, would want to take credit for allowing foreign investment in Chinese industry.

28 See discussion of Landes, David S., “Japan and Europe: Contrasts in Industrialization,” in Lockwood, W. W., ed., The State and Economic Enterprise in Japa. (Princeton: Princeton University Press, 1965), pp. 100–6Google Scholar.

29 Chu, Samuel C., Reformer in Modem China: Chang Chien (New York: Columbia University Press, 1965), p. 26.Google Scholar

30 , Feuerwerker, China's Early Industrialization, p. 222.Google Scholar

31 Hsien-ting, Fong, Chung-kuo chih mien fang-chih-yeh [China's cotton textile industry] (Shanghai: 1934), p. 8.Google Scholar

32 There is an implicit assumption here that government failures—not the social structure, attitudes, or foreign interference—were the major drag on Chinese growth. I believe this to be the case, but this paper is too short to attempt to deal with the various explanations for Chinese failures that are based on the pernicious influence of the Chinese social structure or foreign interference.