Song dynasty and modern China in the trade war
Reference: Financial History of China, 960 – 1644
China in Song Dynasty
Song dynasty, an era when China had the top GDP and GDP per capita, however generally considered as a shameful period by Chinese with regards to dealing with the threats from the north border. In our standard textbook, Song dynasty was criticized due to the large payments of monetary and merchandise tribute to Liao, the northern country with powerful cavalry force, which trumped central China several times. This is a rare case in Chinese history because it is traditionally the neighbors paying the tributes to China rather than the other way around.
Yet, the author, PBOC vice chairman, argues that Song’s tribute to the northern country is a sensible policy from economic perspective:
o China’s army can’t fight but functions as a good social stabilizer. Although China had more than 1mn army force on the ground compared with Liao’s 200K, the army rarely won any single war. The main reason was that the purpose of China’s armed force is for employment rather than military. Because of the large military force, China in Song era achieved relatively better employment and more stable social environment (Song military force sounds like today’s China SOEs). In China’s history, uncontrollable homeless people were the main force of ending dynasties
o Liao was good at military but lame in production. The northern country, considered as barbarians by Chinese, were talented in cavalry tactics and fighting but had been chronically suffering from economic crisis. Every war with China caused the country significant disruptions in domestic production. Wins in the wars with China might gain the country some wealth through robbery but can hardly be sustainable
As a result, the author argues that China’s peace arrangement with Liao including significant tribute is actually the best solution for both sides – China could therefore focus on domestic affairs whereas Liao can be free from chronical economic shocks caused by war and lack of technology. After the peace deall:
o China’s GDP has reached the highest level in history and way ahead of the world. According to the author, China’s GDP per capita during Song dynasty, if measured by today’s standard, was equivalent to China in 2011. More than double of Tang dynasty, when the country’s position in the world was considered as of today’s USA. For example, ordinary people in China could afford silk clothes, which have had been only available for the royal families in the preceding dynasties
o China’s technology development reached the peak level in Song era. Fireworks, math, and science had the fastest development and later dynasties such as Ming and Qing could hardly catch up
o Paper money was widely circulated in the era. Banking system with reserve mechanism was established when the neighbors were still in the barter stage or at best, silver standard.
o Given the economic development, Song’s tribute to Liao was merely 5% of the GDP, far less than the war expense before peace arrangement
If judged by the size of China’s country territory, Song dynasty is definitely ranked at the bottom in history. However, if judged by economic and technological performance, the dynasty is definitely the top one
Extended thoughts as of today’s modern China dilemma
Similar debates have been happening in modern communist ruling when facing the trade war. Deal or no deal. If Song’s experience is of any indication, making a deal is still the rational solution for China not to mention that modern China is yet at the level of US on almost every front. US is no barbarian but a more civilized and powerful country still
Making a deal does look shameful but this is a legacy of the textbook education without giving people the whole picture in Song dynasty. Students only being taught how disgraceful it is for losing the territories and dignities but how good people’s daily life had improved without the threats of wars
China at this moment is defending. SOEs and seemingly large amount of military personnel, similar to Song’s 1mn army force, is more about employment and social stability. What US demands for China, such as IP, trade, and liberalization, are threatening the country’s internal stability. At least, part of China’s resistance of the trade deal is to buy time for reforms without causing destabilization