Chapter 4: Trade
4. Trade Compared to agriculture, trade played a minimal role in China’s traditional economy. It consisted of local market trade, regional long-distance and foreign trade. The first was small in volume and usually involved an exchange between peasants of their respective surplus products, such as grain for cloth and vice versa (Huang 1990). Nevertheless it was by far the most important type of trade in China and accounted for 77 per cent of all trade before 1910 according to Perkins (1969). The distinction between local market and long-distance trade is important from the point of view of economic development, as the latter involves a certain degree of division of labour, specialization and economies of scale and enables producers to capture the resulting productivity gains and, hence, leads to Smithian growth (Wrigley 2002). However, this type of trade was rather limited prior to 1910 and accounted for less than 20 per cent of gross domestic product (GDP) (Perkins 1969). The long-distance trade that was generated was largely regional trade based on the comparative advantage of each region in terms of resources and climate conditions. Thus tea was exported from Fujian, Zhejiang and Anwei, raw cotton and cotton textiles from the Yangzi delta, opium from Yunan, sugar from Guangdong and Fujian, and silk from Jiejiang, Jiangsu, Guangdong and Sichuan. Salt was exported from Sichuan; wheat, soybeans and cotton from North China; and rice from the Yangzi delta (Chen and Meyers 1989). Table 4.1 presents the main commodities entering regional longdistance trade in...
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