The economy of the Ming Dynasty (1368-1662) of China was the largest in the world during that period. It is regarded as one of China's three golden ages (the other two being the Han and Song periods). The period was marked by the increasing political influence of the merchants, the gradual weakening of imperial rule, and technological advances.
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Despite issuing paper money in the early part of the dynasty, the Ming ended up using silver as a means of exchange in their economy; this is due to the massive inflow of silver into the Ming economy throughout the dynasty. The amount of silver used by the Ming economy was extraordinary; the Zheng clan, which was a major clan of merchants in the late Ming, regularly engaged in transactions of several million taels, at a time in which English traders considered tens of thousands of pounds an extraordinary fortune. However, both coin and paper money were used throughout the Ming dynasty. Ming demand for silver was such that at one point most of the output of the mines of Peru went straight to Ming China.
The Ming manufacturing industry was more varied and advanced than that of the Song. Ming iron production surpassed all previous dynasties, with annual production of 195,000 tons a year, compared to 125,000 tons during the height of the Song Dynasty (960-1279) and 180,000 tons for the whole of 18th-century Europe. The Ming charged a 1/15 tax on all iron production.
Another key feature of the Ming manufacturing industry was privatization. Unlike the Song, in which state-owned enterprises played a large role, the Ming reverted to the old laissez faire policies of the Han by privatizing the salt and tea industries. By the middle of the Ming Dynasty, powerful groups of wealthy merchants had replaced the state as the dominant movers behind Chinese industry.
The Ming government abolished the mandatory forced labor by peasants used in early dynasties and replaced it with wage labor. A new class of wage laborers sprung up where none had existed before. In Jingde alone, it was reported that there were no less than 300 pottery factories, all operated by wage laborers.[1]
In order to recover from rule of the Mongols and the wars that followed them, the Hongwu Emperor enacted pro-agricultural policies. The state invested extensively in agricultural canals, reduced taxes on agriculture to 1/30 of the output, and later to 1.5% of agricultural output. Ming farmers also introduced many innovations such as water-powered plows, and new agricultural methods such as crop rotation. This led to a massive agricultural surplus that became the basis of a market economy.[1]
The Ming saw the rise of commercial plantations who produced crops suitable to their regions. Tea, fruits, paint and other goods were produced on a massive scale by these agricultural plantations. Regional patterns of production established during this period continued into the Qing dynasty.[1]
The Columbian exchange brought crops such as corn and potatoes to China, causing a massive increase in the amount of land under cultivation, as land that had been unable to support traditional crops were planted with these foreign crops. During the Ming, specialized areas also popped up planting large numbers of cash crops that could be sold at markets. Large numbers of peasants abandoned the land to become artisans. The population of the Ming boomed; estimates for the population of the Ming range from 160 to 200 million.
Ming agriculture was much changed from the earlier areas; firstly, gigantic areas, devoting and specializing in cash crops, sprung up to demand from the new market economy. Secondly, agricultural tools and carts, some water-powered, help to create a gigantic agricultural surplus which formed the basis of the rural economy. Besides rice, other crops were grown on a large scale.[1]
Although images of autarkic farmers who had no connection to the rest of China may have some merit for the earlier Han and T'ang dynasties, this was certainly not the case for the Ming dynasty. During the Ming dynasty, the increase in population and the decrease in quality land made it necessary that farmers make a living off cash crops. Many of these markets appeared in the rural countryside, where goods were exchanged and bartered.[2]
A second type of market that developed in China was the urban-rural type, in which rural goods were sold to urban dwellers. This was particular the case when landlords decided to reside in the cities, and use income coming from rural land holding to facilitate exchange in the cities. Another way this type of market was used was professional merchants who bought rural goods in large quantities.[2]
The third type of market was the "national market" which was developed during the Song dynasty but particularly enhanced during the Ming. This market involved not only the exchange described above, but also products produced directly for the market. Unlike earlier dynasties, many Ming peasants were no longer producing only products they needed; many of them produced products for the market, which then they sold at a profit.[2]
In the early Ming, after the devastation of the war which expelled the Mongols, the Hongwu Emperor imposed severe restrictions on trade. Believing that agriculture was the basis of the economy, Hongwu favoured that industry over all else, including that of merchants. However, after his death, most of his policies were reversed by his successors. By the late Ming, the state was losing power to the very merchants which Hongwu had wanted to restrict.
The Ming dynasty also engaged in a thriving trade with both Europe and Japan. The amount of silver flowing into the Ming dynasty was estimated by Joseph Needham at 300 million taels, which is equivalent to more than 190 billion dollars in today's money. In addition to silver, the Ming also imported many European firearms, in order to ensure the modernity of their weapons.
Trade and commerce thrived in this liberalized economy, and was aided by the construction of canals, roads, and bridges by the Ming government. The Ming saw the rise of several merchant clans such as the Huai and Jin clans, who disposed of large amounts of wealth. The gentry and merchant classes started to fuse, and the merchants gained power at the expense of the state. Some merchants were reputed to have a treasure of 30 million taels.
The Ming engaged in much overseas trade. A respected sinologist, Joseph Needham believed that the amount of silver flowing into Ming China through trade amounted upwards to 300 million taels of silver. To put this into perspective, the Ming government's entire annual revenues were only 27 million taels, and the Ming had 31% of the world's GDP.
Initially, the Ming engaged in state-sanctioned overseas trade. This was best exemplified by the expeditions of Zheng He, the eunuch admiral, who visited India, East Africa, and Indonesia seven times in massive fleets. However, like many other industries, the trade gave way to the merchants. By the 15th Century, the Ming had abolished the restriction on private overseas trade and Ming merchants prospered. One evidence of this prosperity was the wealth of the Zheng Clan, (Chinese:郑芝龍集團) an influential group of overseas traders who had their own navy and set up their own overseas outposts. The Zheng clan drove the East India company out of Taiwan and virtually out of business in East Asia.
Ming taxation was light. Taxes on agriculture were only 1/30 of agricultural produce, and were later reduced to 1/50 of produce. Taxes on commerce amounted to 1/30 of commerce also, but was later reduced to 1.5%. These low taxes spurred trade, but severely weakened the state. With the coming of the Little Ice Age in the 17th century, the state's low revenues and its inability to raise taxes caused massive deficits, and large numbers of Ming troops defected or rebelled because they had not been paid.
During the Ming, the controls imposed on the economy were gradually relaxed. State monopolies on salt and iron ended as these and other industries were privatized. Taxes were reduced from the high levels under the Mongol Yuan, and the Ming had one of the lowest tax rates (per person) in the world. The entire foreign trade, which was estimated at up to 300 million taels, provided the Ming with a tax of only about 40,000 taels a year. When the Wanli Emperor sought to increase the salt tax, his measures were opposed by violence and the eunuchs he send to collect the tax were beheaded by local officials.
Investment and capital moved off the land and were poured into ventures. Continuing the trend from the Song, Ming investors poured large amounts of capital into ventures and reaped high profits. Many Chinese scholars believe the Ming was the dynasty in which the "sprouts of capitalism" emerged in China, only to be suppressed by the Qing.
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