The economy of the Song dynasty (960–1279) has been characterized as the most prosperous in the world at the time. The dynasty moved away from the top-down command economy of the Tang dynasty (618–907) and made extensive use of market mechanisms as national income grew to be around three times that of 12th century Europe. The dynasty was beset by invasions and border pressure, lost control of North China in 1127, and fell in 1279. Yet the period saw the growth of cities, regional specialization, and a national market. There was sustained growth in population and per capita income, structural change in the economy, and increased technological innovation such as movable print, improved seeds for rice and other commercial crops, gunpowder, water-powered mechanical clocks, the use of coal as an industrial fuel, improved iron and steel production, and more efficient canal locks. China had a steel production of around 100,000 tons plus urban cities with millions of people at the time.
Commerce in global markets increased significantly. Merchants invested 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, Guanzi, Huizi), which circulated on a massive scale. A unified tax system and efficient trade routes by road and canal meant the development of a 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 led some historians to call Song China an "early modern" economy centuries before Western Europe made its breakthrough. Many of these gains were lost, however, in the following Yuan and Ming dynasties, which replaced the Song use of market mechanisms with top-down command strategies.
Agriculture
Expansion 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 was 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 (48 million hectares) and was not surpassed by later Ming and Qing dynasties./F
Irrigation of arable land was also greatly fostered during this period. Prominent statesman and economist Wang Anshi issued the Law and Decree on Irrigation in 1069 that encouraged expansion of the irrigation system in China. By 1076, about 10,800 irrigation projects were completed, which irrigated more than 36 million mu of public and private land. Major irrigation projects included dredging the Yellow River at northern China and artificial silt land in the Lake Tai valley. As a result of this policy, crop production in China tripled. Agricultural yields were about 2 tan (a unit of about ) of grain per mu during the Song dynasty, compared with 1 tan during the early Han and 1.5 tan during the late Tang.
New tools The economic development of China under the Song dynasty was marked by improvements in farm tools, seeds, and fertilizers. The Song inherited the plow innovations described in the Tang dynasty text The Classic of the Plow, which documents their utilization in Jiangnan. The Song improved on the Tang curved iron plough and invented a special steel plough design specifically for reclaiming wasteland. The wasteland plough was not made of iron, but of stronger steel, the blade was shorter but thicker, and particularly effective in cutting through reeds and roots in wetlands in the Huai River valley. A tool designed to facilitate seedling called "seedling horse" was invented under the Song; it was made of jujube wood and paulownia wood. Song farms used bamboo water wheels to harness the flow energy of rivers to raise water for irrigation of farmland.
The water wheel was about 30 chi in diameter, with ten bamboo watering tubes fastened at its perimeter. Some farmers even used three stage watering wheels to lift water to a height of over 30 chi.
High yield Champa paddy seeds, Korean yellow paddy, Indian green pea, and Middle East watermelon were introduced into China during this period, greatly enhancing the variety of farm produce. Song farmers emphasized the importance of night soil as fertilizer. They understood that using night soil could transform barren wasteland into fertile farmland. Chen Pu wrote in his Book of Agriculture of 1149: "The common saying that farmland becomes exhausted after seeding three to five years is not right, if frequently top up with new soil and cure with night soil, then the land becomes more fertile".
Cash crops
The Song period witnessed a rapid expansion of commercial cash crops such as tea, sugar, mulberry, and indigo.
Tea became one of seven common household items - the others being rice, salt, soy sauce, cooking oil, vinegar, and charcoal - during the Song dynasty. Tea houses became a fixture of urban life. As a result of the popularity of tea drinking, tea plantation during the Song period expanded threefold compared to the Tang period. Foreign consumption by Central Asians also fueled the commercialization of tea plantation, particularly in Sichuan. Frontier trade made up a third of Sichuan's tea trade prior to 1104. According to a survey in 1162, tea plantations were spread across 66 prefectures in 244 counties. A variety of tea products were produced with the most prized variety from Raozhou in Jiangxi selling for 500 coins per jin (0.59 kg) while the cheapest teas sold for only 37 coins.
Tea cultivation was at the forefront of development in southern China where the rugged interior upland valleys were unsuitable for rice agriculture. Regions such as Fujian produced only 230,000 kg of tea at the start of the dynasty and increased production to 1.9 million kg by 1084. Most tea plantations were run by rural households but some large private and state-run plantations employed as many as 100 workers. Like the salt industry, tea became a significant source of government income but a monopoly on tea plantation never formed. Despite this, tea production was highly centralized. Outside of Sichuan, a mere five prefectures made up 55 percent of total tea production in 1162. The Beiyuan Plantation (North Park Plantation) was an imperial tea plantation in Fujian. It produced more than forty varieties of tribute tea for the imperial court. Only the very tip of tender tea leaves were picked, processed and pressed into tea cakes, embossed with dragon pattern, known as "dragon tea cakes".Xiong Fan (Song dynasty) Record of Xuan He Era Tribute Tea in Bei Yuan District
Cotton was introduced from Hainan into central China. Cotton flowers were collected, pits removed, beaten loose with bamboo bows, drawn into yarns and weaved into cloth called "jibei"." The cotton jibei made in Hainan has great variety, the cloth has great width, often dyed into brilliant colors, stitching up two pieces make a bedspread, stitching four pieces make a curtain Hemp was also widely planted and made into textiles. Independent mulberry farms flourished in the Mount Dongting region in Suzhou. The mulberry farmers did not make a living on farmland, but instead they grew mulberry trees and bred silkworm to harvest silk.
Sugarcane first appeared in China during the Warring States period. During the Song dynasty, Lake Tai valley was famous for the sugarcane cultivated. Song writer Wang Zhuo described in great detail the method of cultivating sugarcane and how to make cane sugar flour from sugarcane in his monography "Classic of Sugar" in 1154, the first book about sugar technology in China.
With the growth of cities, high value vegetable farms sprung up in the suburbs. In southern China, on average one mu of paddy farm land supported one man, while in the north about three mu for one man, while one mu of vegetable farm supported three men.
Organization, investment, and trade
Commercialization 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.
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 were 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 ), but after the pound locks were introduced, boats carrying 400 tan (roughly ) could then be used. Shen wrote that by his time (c. 1080) government boats could carry cargo weights of up to 700 tan (), while private boats could hold as much as 800 bags, each weighing 2 tan (a total of ).
Urban employment and businesses
The city economy offered a new range of professions and places of work. After the fall of North China, one nostalgic writer delighted in describing each location and business in the former capital Bianjing, near present-day Kaifeng. In Dongjing Meng Hua Lu (Dreams of Splendor of the Eastern Capital) he writes of the alleys and avenues around the East Gate of the Xiangguo Temple in Kaifeng,