page_title: Economy of the Song dynasty
section_title: Organization, investment, and trade
hierarchical_section_title: Economy of the Song dynasty / Organization, investment, and trade
caption_attribution_description: Traveling on the River in Clearing Snow, by Guo Zhongshu (c. 910–977 AD). This painting shows a pair of Chinese cargo ships (with stern-mounted rudders) accompanied by a smaller craft. It is painted on silk and dated to the early Song Dynasty period (960–1279 AD).
context_page_description: For over three centuries during the Song dynasty 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. This made the job a lot faster because coal burns quicker.
  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, 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.
context_section_description: During the Song dynasty, the merchant class became more sophisticated, well-respected and organized than in earlier periods of China. Their accumulated wealth often rivaled that of the scholar-officials who administered the affairs of government. For their organizational skills, Ebrey, Walthall, and Palais state that Song merchants:
  ...set up partnerships and joint stock companies, with a separation of owners (shareholders) and managers. In the large cities, merchants were organized into guilds according to the type of product sold; they periodically set prices and arranged sales from wholesalers to shop owners. When the government requisitioned goods or assessed taxes, it dealt with the guild heads.
  Although large government-run industries and large privately owned enterprises dominated the market system of urban China during the Song period, there was a plethora of small private businesses and entrepreneurs throughout the large suburbs and rural areas that thrived off the economic boom of the period. There was even a large black market in China during the Song period, which was actually enhanced once the Jurchens conquered northern China and established the Jin dynasty. For example, around 1160 AD there was an annual black market smuggling of some 70 to 80 thousand cattle. There were multitudes of successful small kilns and pottery shops owned by local families, along with oil presses, wine-making shops, small local paper-making businesses, etc. There was also room for small economic success with the "inn keeper, the petty diviner, the drug seller, the cloth trader", and many others.
  The preceding Tang dynasty saw the development of ho-pen, the earliest form of joint stock company with an active partner and passive investors. By the Song dynasty this had expanded into the douniu, a pool of shareholders with management in the hands of ching-shang, merchants who operated their businesses using investors' funds. A class of merchants specialising as ching-shang formed. Investor compensation was based on profit-sharing, reducing the risk of individual merchants and burdens of interest payment.
  Rural families that sold a large agricultural surplus to the market not only could afford to buy more charcoal, tea, oil, and wine, but they could also amass enough funds to establish secondary means of production for generating more wealth. Besides necessary agricultural foodstuffs, farming families could often produce wine, charcoal, paper, textiles, and other goods they sold through brokers. Farmers in Suzhou often specialized in raising bombyx mori to produce silk wares, while in Fujian, Sichuan, and Guangdong farmers often grew sugarcane. In order to ensure the prosperity of rural areas, technical applications for public works projects and improved agricultural techniques were essential. The vast irrigation system of China had to be furnished with multitudes of wheelwrights mass-producing standardized waterwheels and square-pallet chain pumps that could lift water from lower planes to higher irrigation planes.
  For clothing, silken robes were worn by the wealthy and elite while hemp and ramie was worn by the poor; by the late Song period cotton clothes were also in use. Shipment of all these materials and goods was aided by the 10th century innovation of the canal pound lock in China; the Song scientist and statesman Shen Kuo (1031–1095) wrote that the building of pound lock gates at Zhenzhou (presumably Kuozhou along the Yangtze) during the 1020s and 1030s freed up the use of five hundred working laborers at the canal each year, amounting to the saving of up to 1,250,000 strings of cash annually. He wrote that the old method of hauling boats over limited the size of the cargo to 300 tan of rice per vessel (roughly 17 t/17,000 kg), but after the pound locks were introduced, boats carrying 400 tan (roughly 22 t/22,000 kg) could then be used. Shen wrote that by his time (c. 1080) government boats could carry cargo weights of up to 700 tan (39 t/39,000 kg), while private boats could hold as much as 800 bags, each weighing 2 tan (i.e.
caption: A Song painting on silk of two Chinese cargo ships; Chinese ships of the Song period featured hulls with watertight compartments.
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