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The Growth and Decline of the Modern Sector and the Merchant Class in Imperial China

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  • Kenneth S. Chan

    () (CUHK - City University of Hong Kong [Hong Kong])

  • Jean-Pierre Laffargue

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper offers an explanation of why, in Imperial China, the merchant class expanded and the economy modernized up to the 13th century, and why it entered into decline from the 14th century onward. The modernization of China required the accumulation of public capital and the building of good institutions, upon which a vibrant class of merchants and entrepreneurs could gradually emerge. This class contributed to the enrichment of the society and the emperor, but its activities also weakened the dominance of the emperor and the élite, who would then prefer to block the modernization of China and to restrict the size of the merchant class, putting the economy into long-run stagnation. However, when the emperor faced severe foreign military threats and when he realized that a modern sector improved the defense capabilities of China, he made the opposite choice.

Suggested Citation

  • Kenneth S. Chan & Jean-Pierre Laffargue, 2014. "The Growth and Decline of the Modern Sector and the Merchant Class in Imperial China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01044968, HAL.
  • Handle: RePEc:hal:cesptp:hal-01044968
    DOI: 10.1111/rode.12066
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01044968
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    References listed on IDEAS

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    1. Ronald Findlay & Kevin H. O'Rourke, 2007. "Power and Plenty: Trade, War and the World Economy in the Second Millennium (Preface)," Trinity Economics Papers tep0107, Trinity College Dublin, Department of Economics.
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    Cited by:

    1. Tai, Meng-Yi & Chao, C.C. & Lu, Lee-Jung & Hu, Shih-Wen & Wang, Vey, 2016. "Land conservation, growth and welfare," The North American Journal of Economics and Finance, Elsevier, vol. 38(C), pages 102-110.

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