IntroductionIntroduction 1 Introduction When doing research on China’s political affairs one needs to take into account economic factors, just as one needs to consider political factors when doing research on China’s economic affairs: these two threads in the social fabric of a country are closely intertwined. Given the paucity of knowledge about economic activity in Qing China, especially before 1840, can we use the government’s financial state as a gauge to evaluate the state of the economy? Even when one has taken into consider- ation all aspects of the special complexity of China’s history, is it acceptable to estimate the country’s economic development by studying its fiscal data? Maybe yes, maybe no. I intend to discuss the appropriateness of the various items of state finance for deriving information about the aggregate economy in Qing China. China in its late imperial era (1644–1911) was still an agrarian society, albeit one in the process of great change. From a fiscal point of view, it was the period in which China moved from being “a state with a fiscal system to becoming a fiscal state”. The fiscal system of the Qing dynasty (1644–1911) before 1850 com- prised two basic elements: conventional financial revenue and expenditure; and temporary financial revenue and expenditure. Conventional financial rev- enue came from five main sources: 1. Tian Fu (Land Tax) 2. Cao Liang (Tribute Grain) 3. Yan Shui (Salt Tax) 4. Guan Shui (Customs duties) 5. Za Fu (Miscellaneous taxes, including a fish tax, a tea tax, mineral taxes, and so on) Of these five sources, Land Tax was the most important and generated the larg- est portion of financial revenues. In the early Qing (before 1840), total annual revenue was about 45 million taels of silver, with land taxes accounting for about 25 million taels, about 50% of total annual revenues. The Land Tax was to a large extent determined by external factors such as weather, harvest and natural disasters, as well as arable area and the yields per hectare. However, the elasticity of Land Tax was very small, so revenue from land taxes did not change much over the business cycle. For this reason, it is very difficult to use Land Tax to estimate the actual economic situation and economic development in the country. © koninklijke brill nv, leiden, 2017 | doi 10.1163/9789004324886_002 2 Introduction Tribute Grain, the second item on the list of revenue sources, was collected from only eight provinces: Jiangsu, Zhejiang, An’hui, Jiangxi, Hubei, Hu’nan, Shangdong, and Hennan. All of these were located near waterways, in particu- lar the Grand Canal and the Yangtze River. The annual quota of Tribute Grain to be collected was 3-4 million dans (a dry unit of measure for grain of approxi- mately 50 kg) of rice. The transport of grain in traditional China was a relatively simple process as the only convenient way of transporting such large amounts of rice was on waterways. Before 1850, collection of Tribute Grain was almost never reduced or waived. The Taiping Rebellion (1851–1864), the biggest rebellion in the Qing dynasty, brought a change in this policy, however. When the rebellion broke out, the eight provinces were devestated to varying extents. Activities to retrieve Tribute Grain after the Taiping Rebellion had been suppressed were carried out by Zeng Guofan (1811–1872), Li Hongzhang (1823–1901), and Zuo Zongtang (1812–1885), among the most powerful governors of the late Qing. Ultimately, by the final year of the Qing dynasty (1911), the annual contribution from Tribute Grain had fallen to as little as 1 million dans of rice. Clearly, it would be difficult to estimate economic activity in the Qing from the amounts of Tribute Grain collected.1 The third item on the list conventional sources of fiscal revenue is Salt Tax. Amounts raised from this tax were strongly influenced by two factors: popula- tion numbers; and per capita consumption of salt. Although population increased quickly during the Qing, per capita consumption of salt did not change very much. So, did revenues from the Salt Tax increase significantly in the early Qing? This seems not to have been the case. During the early Qing, the government divided the salt-producing areas into several geographical regions, each of which could only sell the salt it produced in its own territory. If they sold their salt in another region, this was considered to be “smuggling”, which the government punished severely. Nevertheless, smuggling was wide spread and endemic, and this prevented substantial increases in revenue being made from the Salt Tax. In general, in the early Qing the Salt Tax consistently generated revenues of around 5 million taels of silver per year. Only in the late Qing, when Likin (taxing all commercial transactions by 1% of the goods value) was introduced, did tax revenues from salt—called Yanli (“salt Likin”)— increase substantially. Of course, this also makes it very difficult to derive levels of economic activity from revenues arising from the Salt Tax in the early Qing. Miscellaneous taxes, the fifth item on the list, could be quickly changed or adapted if the government wanted to do so. All sorts of fiscal revenue arose 1 More detail could be seen in the book of Ni Yuping (2005)..