Regulating Effects of the Forms of Chinese Commercial Profit on Industrial Profit

This section examines how the forms of Chinese commercial profit regulate industrial profit. It argues that where industrial profit is unable to regulate interest and remains constrained by it, industry also fails to regulate commerce and is instead subordinated to commercial profit. Starting from the small-scale and dispersed character of rural production, it shows why merchants become necessary intermediaries and why profit equalization is often reflected primarily in circulation rather than in production, allowing commercial profit to expand at the expense of industry. It then traces how the historical linkage between commerce and landholding shifted under modernization toward comprador dependence and international capital, changing the conditions under which commercial profit is obtained while preserving its structural advantage over national industry. Because China’s industrial sector remained limited in scale and lacked the conditions for the formation of a normal average industrial profit, commercial profit—reinforced by external privileges—continued to suppress and reshape industrial profitability. The section concludes that commerce cannot ultimately prosper in isolation from production, since commercial profit ultimately depends on the surplus labour and surplus value embodied in industrial products.