Economy of the Song Dynasty

For over three centuries during the Song Dynasty (960–1279) China experienced sustained growth in per capita income and population, structural change in the economy, and increased pace of technological innovation. Movable print, improved seeds for rice and other commercial crops, gunpowder, water-powered mechanical clocks, the use of coal as a source of fuel for a variety of industries, improved techniques for iron and steel production, pound locks and many other technological innovations transformed the economy. In north China, the main fuel source for ceramic kilns and iron furnaces shifted from wood to coal.

During the Song dynasty, there was also a notable increase in commercial contacts with global markets. Merchants engaged in overseas trade through investments in trading vessels and trade which reached ports as far away as East Africa. This period also witnessed the development of the world's first banknote, or printed paper money (see Jiaozi, Huizi), which circulated on a massive scale. Combined with a unified tax system and efficient trade routes by road and canal, this meant the development of a truly nationwide market. Regional specialization promoted economic efficiency and increased productivity. Although much of the central government's treasury went to the military, taxes imposed on the rising commercial base refilled the coffers and further encouraged the monetary economy. Reformers and conservatives debated the role of government in the economy. The emperor and his government still took responsibility for the economy, but generally made fewer claims than in earlier dynasties. The government did, however, continue to enforce monopolies on certain manufactured items and market goods to boost revenues and secure resources that were vital to the empire's security, such as tea, salt, and chemical components for gunpowder.

These changes made China a global leader, leading some historians to call this an "early modern" economy many centuries before Western Europe made its breakthrough. Many of these economic gains were lost, however, in the succeeding Yuan dynasty.

There was a massive expansion of ploughland during the Song dynasty. The government encouraged people to reclaim barren lands and put them under cultivation. Anyone who opened up new lands and paid taxes were granted permanent possession of the new land. Under this policy, the cultivated land in the Song dynasty is estimated to have reached a peak number of 720 million mu, and was not surpassed by later Ming and Qing Dynasties.

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