China’s rise as the world’s second-largest economy surely is the most dramatic development in the global economy since the year 2000. But China’s prominence in the global economy is hardly new. Since 500 bce, a burgeoning market economy and the establishment of an enduring imperial state fostered precocious economic growth. Moreover, contrary to the view that China’s economy withered under the dual constraints of Western colonialism and Chinese tradition after 1800, recent scholarship has identified the onset of modern economic growth in response to new incentive structures, investment opportunities, ideas, and technology, laying the foundation for the post-1978 economic miracle. China’s combination of market-led growth under the firm hand of the state has produced a model of economic development that challenges conventional theories of capitalism and economic growth. The spectacular growth of the contemporary Chinese economy also spurred deeper investigation into the Chinese economy – long a neglected field of study, at least in the Western academy. Scholarship on Chinese economic history has now developed to the stage where a Cambridge History devoted to the subject is appropriate and feasible.

The genesis of Chinese political economy can be traced to the Warring States era (453–221 bce), which was marked on one hand by rapid economic progress (the spread of iron metallurgy, advances in agricultural productivity, the invention of coinage, and the emergence of a private merchant class) and on the other hand by the rise of autocratic states (accompanied by the centralization of political power and mass mobilization for war). The economic principles and policies that later shaped the formation of the first unified empires – what I will designate the militarist–physiocratic state – were enunciated by leading ministers of the most successful autocratic states, such as Li Kui in Wei and Shang Yang in Qin, and set down in works such as The Book of Lord Shang and Han Fei Zi.

The long transition – often marred by violence – between Tang and Song discerned by Naitō Konan marked the advent of a new world. The An Lushan Rebellion (755–763) triggered profound political and military crises that shattered the institutions of the Tang dynasty, but also set in motion the slow progression of the market economy, which the Tang leadership began to see as the necessary means to restore its fiscal authority. With the collapse of the equal-field system of state land allocations in the wake of the rebellion, the Tang abandoned the principle of uniform, in-kind taxation of farming households as the basis of its fiscal and military systems. Urgent necessity prompted the adoption of new and more flexible fiscal strategies to secure revenues from commerce and consumption. The expansion of the market economy mitigated the Confucian elite’s traditional hostility toward commerce and acted as a key catalyst for the mercantilist policies pursued by the southern kingdoms during the first half of the tenth century.

China is one of the seven regions in the world where agriculture developed independently, and among the earliest, with cultivation of cereal crops dating back to at least 7000 bce. The unique repertoire of crops first cultivated in China – millet, rice, and soybeans – remained staple foods throughout Chinese history, although millet was mostly displaced by wheat, an import from West Asia, by 1000 ce. The long history of the development of agriculture and the rise of cereal cultivation as the mainstay of human livelihood and economic activity dramatically altered the natural landscape, its landforms, soils, and waters as well as its flora and fauna. Domestication of the environment to serve human needs for food, clothing, shelter, and fuel repeatedly realigned the balance between human populations and natural resources. The strain of burgeoning human populations and their demands on these resources necessitated continual technological innovation to sustain agricultural production and conserve natural resources. By the year 1000 the human impact had utterly transformed the ecology of northern China, especially in the watershed of the Yellow River.

The integrity and durability of the Chinese empire over two millennia rested on the strength of its fiscal capacity. From antiquity, sovereignty was linked to the ruler’s duty to provide for the economic as well as moral welfare of his subjects. Rulers of the Bronze Age manifested and reproduced their authority through distribution of wealth among their kinsmen and noble allies. The autocratic monarchs who rose to dominance after 500 bce amassed wealth to buttress their military prowess, but they also strove to protect the independence and livelihood of the smallholder family farmers who undergirded their economic prosperity. The institutional apparatus of the fiscal state – centralized planning of taxation and expenditure to satisfy the state’s commitments to good governance – became a defining feature of the first empires, beginning with the Qin dynasty (221–206 bce). Yet at the same time the rise of a market economy also shaped the relationship between the state and its subjects. Even the command economy instituted by the Qin Empire made accommodations to markets, merchants, and money.

China’s rise as the world’s second-largest economy surely is the most dramatic development in the global economy since the year 2000. But China’s prominence in the global economy is hardly new. Since 500 BCE, a burgeoning market economy and the establishment of an enduring imperial state fostered precocious economic growth. Moreover, contrary to the view that China’s economy withered under the dual constraints of Western colonialism and Chinese tradition after 1800, recent scholarship has identified the onset of modern economic growth in response to new incentive structures, investment opportunities, ideas, and technology, laying the foundation for the post-1978 economic miracle. China’s combination of market-led growth under the firm hand of the state has produced a model of economic development that challenges conventional theories of capitalism and economic growth. The spectacular growth of the contemporary Chinese economy also spurred deeper investigation into the Chinese economy – long a neglected field of study, at least in the Western academy. Scholarship on Chinese economic history has now developed to the stage where a Cambridge History devoted to the subject is appropriate and feasible.