The China Boom: Why China Will Not Rule the World

IMPERIAL CHINA has long been portrayed in Eurocentric historiography as a plainly agrarian and inward-looking empire in contrast to the commercially dynamic and maritime-oriented Europe. Mark Elvin and others reject this image, arguing that China experienced a golden age of vital commercial expansion and growing maritime trade from the twelfth to the thirteenth century (Shiba 1970, 1983; Ma 1971; Elvin 1973; Abu-Lughod 1989: 316–40; Braudel 1992: 3:32). These trends were terminated abruptly in the fifteenth century, when the famous Zheng He expedition ended and China’s capital city was moved from Nanjing in the south to Beijing in the north. China subsequently turned away from the ocean and was caught in a “high-level equilibrium trap” (Elvin 1973), lagging behind Europe economically and technologically, which paved the way for China’s humiliation by European gunboats in the nineteenth century (see also Wallerstein 1974: 53–63; Abu-Lughod 1989: 340–48; Braudel 1992: 3:32).

This revisionist image of China is not much of a departure from the traditional view as far as the four centuries between the Ming retreat from the sea and the Opium War (1839–1842) are concerned. It is challenged, however, by a more recent wave of research illustrating a renaissance of maritime trade and internal commerce in China beginning in the sixteenth century. The enormous demand for Chinese products such as silk and ceramics in the world market transformed China into a “sink of silver” that absorbed most of the bullion originating in the Americas and circulating in the world economy at that time (see, e.g., Atwell 1977, 1982, 1998; von Glahn 1996: 113–41; Frank 1998; Pomeranz and Topik 1999; Pomeranz 2000). This absorbed silver fueled a commercial prosperity in China from the seventeenth century to the eighteenth century. In early-modern times, living standards in China reached, if not surpassed, the level of the standards in western Europe. In retrospect, therefore, the contemporary economic ascendancy of China, as Joseph Nye notes, is not a “rise” but a “renaissance” because China is simply regaining the economic prosperity it once enjoyed in early-modern times (2002, 19). This U-shaped change in China’s economic fortune from around 1800 is illustrated by a comparison of China’s and the West’s shares of global gross domestic product (GDP) per capita in this period, as shown in table 1.1.

In this chapter, I examine the form and extent of China’s commercial revolution before the nineteenth century and why such a commercial revolution did not develop into capitalist transition and industrial revolution in the nineteenth century, as it did in western Europe. Starting in the early nineteenth century, China’s economy deteriorated, whereas Europe took off under industrial capitalism and employed its new industrial-military power to subjugate China. This is the backdrop against which all examinations of China’s quest for capitalist-industrial development in the twentieth century must be viewed.

Commercial Revolution in Ming–Qing Times

Eighteenth-century China is known to historians as a golden age of long-lasting peace and prosperity. Many attribute this prosperity to the massive influx of American silver (Quan 1987, 1996b; von Glahn 1996; Frank 1998: 108–11, 160–61). Though American silver (together with Japanese silver before the Tokugawa Seclusion in the 1630s) began to flow into China in large quantities in the late sixteenth and early seventeenth centuries, during the last decades of the Ming dynasty (1368–1644), the amount then was insubstantial compared to the amount imported during the eighteenth century. Most of the silver absorbed by China came from European traders. By the early eighteenth century, China’s transition to a silver standard, under which government taxes and bulk transaction were paid in silver, had been completed.

TABLE 1.1 China’s and the West’s Share of Global GDP and GDP per Capita (%), 1500–2008

* Data from 1938 used for China’s share of GDP per capita in 1940.

Source: Maddison n.d.

In the late sixteenth and seventeenth centuries, the bullion influx’s contribution to economic growth was more or less neutralized by the turmoil of state breakdown, civil war, and dynastic transitions. It was only after the consolidation of the Qing dynasty (1644–1911) that the silver could contribute to a full-fledged commercial expansion. The extraordinary increase in the quantity of silver circulating in the Chinese economy led to long-term modest inflation, or what is known as the “Chinese price revolution” of the eighteenth century (Quan 1996a, 1996c, 1996d). During that century, the general price index of China increased by 300 percent. This inflation was not distributed evenly, however, hitting mostly the economically advanced lower Yangzi valley and southeastern coastal areas (which were closely linked to the export market) (Marks 1991; Quan 1996d). Such a differential inflation rate fostered a regional division of labor across the empire. High inflation and high wages brought urbanization and proto-industrialization to the central and southeastern coast. Meanwhile, vast areas of inland regions with less inflationary pressure were transformed into peripheral zones, supporting the development in the coastal core regions by supplying them with foodstuffs (principally rice) and other raw materials (such as timber) (Atwell 1977, 19–20; P. Smith 1988; Chao 1993, 40–42; Marks 1996, 1998; J. Fan 1998; Rowe 1998; Xu T. 1999).

In the lower Yangzi region, specialization in growing mulberry and cotton bushes as well as skyrocketing rice prices made the region dependent on food imported from Hunan, Shandong, and Sichuan (Li B. 1986). Raw silk and cotton production was turned from a sideline (complementing rice cultivation) to a major economic activity among the peasants. Weaving of silk and cotton textiles was increasingly separated from the realm of household production and concentrated in urban workshops (Li B. 1986; Chao 1993: 41). There were also merchants who organized mass production of textiles and porcelains specifically targeted at the foreign market (Chao 1993: 41–42; He 1996: 52). In the biggest cities of the region, such as Hangzhou and Suzhou, factories hiring from a couple hundred to a thousand workers were not uncommon. Class conflicts between the workers and factory owners became an emergent pattern of urban life (Fang X. et al. 2000; Fang Z. et al. 2000; Wu 2000).

In Fujian and Taiwan, large-scale sugar plantations appeared in the late Ming period, and the sugar-processing industry developed simultaneously (Chen X. 1991: 70–77). Just as mulberry growing displaced rice cultivation in the lower Yangzi region, sugar plantation increasingly displaced rice cultivation in Fujian and Taiwan, which came to rely on other provinces for their food supply (Chen X. 1991: 69–70). Starting in the eighteenth century, the mountainous Fujian province became a major tea-producing region of China as well.¹ “Raw tea leaves were collected by wholesale merchants, then processed in workshops set up in the market towns or cities in the vicinity of the tea production sites. The processed tea was sold across the domestic market or to European traders in Guangzhou, the only port open for foreign trade in the mid-Qing period” (Chen C. 1982: 48).

The commercialization of Guangdong was relatively slow in the Ming period. Only after the Qing government instituted policy in 1757 dictating that all foreign trade had to be conducted in Guangzhou, the provincial capital of Guangdong, did Guangdong’s development take off. Before 1757, Guangdong silk was less welcomed by foreign merchants because of its inferior quality compared to Yangzi silk. After that, however, more peasants abandoned rice cultivation and shifted to mulberry growing in the region (Ye and Tan 1984; Marks 1991, 1996). At the same time, the city of Foshan (near Guangzhou) developed into a national center of ironware production, manufacturing agricultural and industrial instruments that were marketed to all corners of the empire via domestic trade routes (Lo 1994: 46–66).

During the eighteenth century, the Qing government actively intervened in the agrarian economy of the rice-exporting provinces. Aggressive irrigation and reclamation projects were launched in the peripheral zones (such as Guangxi next to Guangdong and Sichuan at the upper Yangzi River) so that more rice could be produced and exported to the economically advanced, rice-deficient provinces (P. Smith 1988; Marks 1991, 1996; Gao 1995; Xu T. 1999). Accompanying the reclamation projects was a massive state-planned migration program that resettled the population from certain overcrowded provinces to the newly reclaimed agricultural land in the periphery. Besides these endeavors, the government was keen on improving empire-wide networks of rivers, canals, and roads, which were essential to long-distance, interregional trade of bulk goods. It is not an accident that French physiocrats in the eighteenth century regarded China, based on descriptions from Jesuits missionaries and other travel writers, as the model of an unfettered and advanced market economy (Hung 2003).

The Curious Case of China–Europe Divergence

Given China’s commercial advancement in the eighteenth century, it is puzzling why industrial capitalism emerged spontaneously in late-eighteenth-century Europe but not in China. This question has in fact been puzzling generations of historians and sociologists since Marx and Weber. Most classical social theories about Europe’s transition to capitalism stipulate that the key to such a transition is how and why a group of urban bourgeoisie managed to break away from the feudal order to become an autonomous and then a dominant social group (Weber 1958, [1930] 1992; Marx [1848] 1972; cf. Hilton 1978). Whether the theories focus on the role of dynamic class struggle, medieval urban institutions, or Protestant asceticism in fostering a distinct and intact community of entrepreneurs, they mostly agree on the urban origins of modern capitalism. These urban-origin theories were overshadowed in post–World War II social sciences by the “agrarian origins” school, which sees industrial capitalism in England as first and foremost the result of England’s early-modern Agricultural Revolution. According to this school of thought, the revolution not only freed up a large amount of labor to be absorbed by expanding industries but also generated large agrarian surplus in the form of the rural elite’s elevated income, which was then invested in the urban-industrial sector to fuel the Industrial Revolution.

Studies of capitalist transition in Japan and of the nontransition in China have been influenced heavily by the agrarian-origin theories of Europe’s transition. For example, many studies explain Japan’s successful capitalist-industrial takeoff in the nineteenth century in terms of an agricultural revolution in the Tokugawa period (1603–1867). They find that the endogenous forces that can lead to capitalist takeoff were ripe by the time imperialist intrusion forced the Japanese state to struggle for survival by promoting capitalist industrialization from above (T. Smith 1959; Collins 1997). The most prevalent theories about China’s nontransition to capitalism are equally influenced by the agrarian-origin school. For example, the “agricultural involution” thesis suggests that unchecked demographic growth in early-modern China led to a continuous diminishing per capita agricultural productivity and a lack of incentive in innovating labor-saving technology because of the abundant supply of zero-cost labor (P. Huang 1985, 1990; cf. Elvin 1973). With a stagnant or even deteriorating agrarian sector, a capitalist-industrial takeoff was simply out of the question.

But this agrarian-origin approach is challenged by new evidence about China’s early-modern economy, as outlined in the previous section. The sweeping commercialization of the economy led to the dissolution of the coercive agrarian order based on manorial estates and the rise of a peasant economy grounded in free alienation and transaction of land and labor (Jing 1982: 169–81; P. Huang 1985: 97–105; von Glahn 1996; Rowe 1998, 2002: 493–502). Continuous innovations in farm management and production technologies by free peasant producers, in addition to the practice of checking population growth (through such means as infanticide), enabled long-term growth in agricultural productivity, rural income, and peasants’ standard of living in the empire’s economic core (Lee and Campbell 1997; Li B. 1998; Lee and Wang 2000). It is noted that net return on peasants’ labor increased by 20 to 50 percent from 1600 to 1750 in the most advanced region, which entailed “highly impressive gains for peasant households who enjoyed high incomes and apparently voluntary leisure” (Goldstone 2003: 29). The socioeconomic indicators given in table 1.2 show that China was not at all behind England at the turn of the nineteenth century.

Despite this homegrown agricultural revolution, industrial capitalism did not emerge spontaneously in eighteenth-century China, as it did in England, nor did it take root under the government’s conscious promotion of it in the nineteenth century, as it did in Japan. These inconvenient new findings unsettled the agrarian-origin school and triggered a new wave of scholarship to look for a new explanation of industrial-capitalist transition in Europe and China.

The new explanation that attracts the most attention is Kenneth Pomeranz’s (2000) ecological argument. Pomeranz asserts that the divergence of developmental patterns between England and China did not occur until the turn of the nineteenth century. Before that, both economies were experiencing impressive growth in commerce, population, and agricultural productivity. Toward the end of the eighteenth century, development in both regions reached the limit that the available and diminishing ecological resources, such as timber and cultivable land, could allow. Whereas Chinese development was trapped, however, England successfully circumvented the ecological constraint and leaped forward to industrial revolution. The single most important factor that allowed England to overcome this constraint was its access to vast resources in the Americas, such as raw cotton and sugar.

TABLE 1.2 Select Indicators of Economic Performance and Living Standards in Early-Modern China and Europe

^a Data based on English Midlands c. 1806 and Yangzi Delta c. 1820, with constant price level at 1820 (Allen 2009: table 5) (d = pence).

^b Data based on nineteenth-century England and nineteenth-century China (Pomeranz 2000: 39).

^c Data based on mid-eighteenth-century England and select economically advanced regions in mid-eighteenth-century China (Pomeranz 2000: 36–37).

^d Data based on figures for all major trade routes in eighteenth-century China and the eighteenth-century Baltic trade, which accounted for 80 percent of the total European long-distance grain trade (Shiue and Keller 2007: 1191–92).

This explanation is neat, but it is problematic in three ways. First, it does not clarify why England did not capitalize earlier on its easy access to American resources to foster capitalist-industrial development. Second, the availability of American resources to England versus their unavailability to China is not accurate. American resources in eighteenth-century England were far from inexpensive. Many of these resources were in fact sold to England at higher-than-average world-market prices (Vries 2001). It would not have been difficult for China, possessing a huge silver reserve originating in several centuries of trade surplus, to purchase New World resources from the world market if need arose (see Goldstone 2004: 279). Third, Japan had no direct access to American resources initially, but it industrialized successfully in the nineteenth century by purchasing most of its essential raw materials from the world market (Howe 1996: 90–137).

Therefore, Pomeranz’s ecological factors may have contributed to the nonemergence of capitalism in China, but they are not the whole story. One crucial factor missing in eighteenth-century China was a strong, urban, entrepreneurial class capable of concentrating the agrarian surplus to foster a capitalist-industrial takeoff. Recent studies of the Industrial Revolution in England have highlighted the crucial role of such an elite in siphoning the agrarian surplus brought about by the Agricultural Revolution to facilitate the industrial technological breakthrough.

Jack Goldstone (2000, 2001, 2002, 2004; see also Carroll 2006) stipulates that the key to England’s capitalist-industrial takeoff at the turn of the nineteenth century was the popularization of a unique engineering culture, which motivated entrepreneurs to turn preexisting scientific knowledge to practical improvement of commercial venture. A question to follow is, Who was the primary impetus behind the rise and diffusion of this engineering culture in England? According to Robert Allen’s (1983) theory of “collective invention,” the application of abstract scientific knowledge to innovative practical use during the Industrial Revolution was always conducted through recurrent and costly experimentation by capital-intensive firms and the mutual diffusion of the subsequent knowledge among these firms. This argument is reaffirmed by Richard Lachmann’s observation that a process of “forced draught,” which drastically centralized the vast economic surplus from the agrarian economy in the hands of urban entrepreneurs, was necessary to turn the gains of the Agricultural Revolution into the fuel of industrial investments and innovations that finally led to the “spontaneous combustion” of the Industrial Revolution. This centralization was carried out via various routes, such as landowners’ investment in urban companies and urban–rural commercial exchange with the terms of trade in the former’s favor (2000: 199–203).

In other words, collective invention or diffusion of an engineering culture in production is impossible without a critical mass of resourceful entrepreneurs who are capable of concentrating the vast surplus from the agricultural sector and using this to execute the costly trial-and-error development of productive technology. In England, the first generation of industrial entrepreneurs was far from a group of self-made men. Many of them were the offspring of established entrepreneurial families who relied on their families’ accumulated wealth and resource networks for their initial investment (Brenner 1993: 51–91; Rose 2000: 66–79; Grassby 2001).

The lack of such a preexisting urban entrepreneurial elite who could accumulate capital over generations accounts for the absence of a spontaneous capitalist-industrial takeoff in China despite the large agrarian surplus there: the surplus remained dispersed among the peasants instead of being centralized to fuel urban-industrial growth (Hung 2008). To discern why there was no such strong entrepreneurial elite in China, we need to look into the Qinq Empire’s class structure and political institutions.

Where Had All the Capitalists Gone?

During Qing times (1644–1911), the state elite and the rural gentry elite constituted the two major elite groups in China. After the Manchus secured their rule over China in the mid–seventeenth century, the Manchu emperor reestablished a centralized bureaucracy more rationalized than bureaucracies of earlier dynasties (Zelin 1984; Marsh 2000). The state elite class was composed of bureaucrats appointed by the emperor and were mostly high-level degree holders emerging from the imperial examination (Ho P. 1962; Elman 2000). The gentry elite were lower-level degree holders not eligible for bureaucratic posts. They usually stayed in their home areas and served as informal leaders in local communities (Jing 1982).²

The gentry elite, who enjoyed tax privileges on their landed property and could therefore easily expand their holdings, became the dominant landholders, living on fixed rents collected from tenants. During the eighteenth century, lay landlords, who held no imperial degree and therefore no gentry status, increased in number and occupied an ever larger proportion of the whole landholding class (Li W. and Jiang 2005: 369–88). But most lay landlords owned small tracts of land, and they depended on the local gentry for communication with the government and many other services, such as rent collection. Many of them even registered their land under the name of local gentry to partially enjoy the gentry’s tax privileges. They were therefore in a subsidiary position and never constituted a major elite group (Brook 1990). The state and gentry elite were generally collegial and intertwined, similar in their ideological outlook and linked by kinship or other social ties. Local bureaucracies, usually understaffed, heavily relied on the local gentry’s collaboration for a wide range of government functions, such as arbitration of disputes and tax collection. In return, the gentry secured, on top of their tax privileges, a share of the local government’s revenue as remuneration for their services (Chang C. 1962: 43–73, 197; Ch’u 1962).

Besides these two major elite groups, a nascent group of entrepreneurial elite emerged in concert with the rapid commercialization of the economy. These elites normally operated in merchant groups bounded by native-place identities and shared dialects. Upon the webs of native-place associations, these merchants constructed commercial networks all over the empire to conduct their profitable long-distance trade and financial affairs, thus facilitating the circulation of grains, salt, textiles, and other goods across the empire (Hamilton 2006: 43–47, 56–70, 93–126). The mercantile elite were most commonly lay peasants or landlords who diverted their savings to commerce (Ye 1980).

In contrast to the traditional view that the Qing government was always hostile to mercantile activities and eager to curb commercial growth because of the Confucianist loathing of commerce, recent studies converge on the view that “the Qing seems perhaps the most pro-commercial regime in imperial Chinese history” (Rowe 1998: 185). By the eighteenth century, the tenet that, in addition to agriculture, “industry and commerce are also the pillars of the world” (gongshang yiwei ben) as well as the conviction that merchants’ property rights (ye) should be protected against official abuses and other menaces had replaced the anticommercial variant of Confucianism as the dominant ideology among the state and gentry elites (von Glahn 1996: 215–24; Rowe 2001: 155–287; Zelin, Ocko, and Gardella 2004).

In the 1720s, a pivotal decade for the centralization of the Qing state (Zelin 1984), the emperor even declared in an edict that “both merchants and other commoners were like children in the empire as a family … and they should be treated equally” (qtd. in Shen 2007: 85). This favorable disposition toward commerce is consistent with the bureaucracy’s increasing dependence on private merchants to secure a local grain supply, complete infrastructure projects, and even procure logistical supplies for military campaigns (Rowe 1998; Perdue 2005: 315–406). Many officials and rural gentry families saw commerce as an opportunity to diversify their sources of income. Covert or open investment by these elite families made up a large portion of the operating capital of many successful urban commercial ventures in Qing times (Pomeranz 1997). Because the state and gentry elites supported or even overlapped with the emergent entrepreneurial elite, one would expect the latter to expand and strengthen continuously. In reality, however, the reproduction of the entrepreneurial elite was severely limited, and they never became a major and independent group on equal footing with the state elite and gentry elite.

Throughout Qing times, a number of conspicuous merchant groups monopolized the most profitable business sectors. The most outstanding case was the Anhui merchant group, which originated in Anhui province. It thrived on the production of and trade in salt, textiles, tea, and other items in the economically advanced metropolises along the Yangzi River, such as Yangzhou, Suzhou, and Hankou. They always operated their businesses under the blessing of state officials, who were happy to see their contribution to the stable supply of consumer goods and to benefit from their tax contribution as well as from bribes. Despite the prominence of these merchant groups at large, they were mostly no more than decentralized networks constituted by individual merchant families that rose and fell successively. These families rarely thrived over generations. The common pattern was that after a certain successful entrepreneurial family accumulated sufficient initial fortune, they pulled out from commerce and turned themselves into gentry or state elite by investing their wealth in preparing their younger generations for imperial examination (Wang Z. 1996: 1–57; Hamilton 2006: 43–47, 56–70).

This pattern among China’s merchant families is exemplified by the Pan family, one of the wealthiest Anhui merchant families in the seventeenth and eighteenth centuries. As a member of the Anhui merchant group, the Pans thrived in the salt and condiment trade in the seventeenth century. Late in that century, they moved from their native place in Anhui to Suzhou, the wealthiest city of early-modern China, to expand their business. But after this resettlement, the family started shifting their resources from commercial investment to education. They established schools and hired prestigious literati to educate the younger members of the family. By the late eighteenth century, only one minor household in the extended family remained in the family business, which had already shrunk substantially. Most of the Pans managed to obtain different levels of imperial degrees and become the leading gentry and state elite in the Suzhou area. Some of them even became high-ranking officials in the central government. Their political power was so overwhelming that their mercantile origin was eventually nearly forgotten (Xu M. 2004: 195–246). The same pattern can be found among the wealthiest Anhui salt merchant families based in Yangzhou (Ho P. 1954; Wang Z. 1996). In eighteenth-century Hankou, the Anhui merchant families even pooled together their financial resources to found a nationally known academy dedicated to preparing their offspring for the imperial examination (Li L. 2002).

With the recurrent departure of the most successful members of the merchant class from commerce, capital accumulation and further expansion of these merchant networks were limited, though the sustenance of the network at large was guaranteed by the continuous entry of new members from modest backgrounds. This history stands in contrast with that of the powerful business families growing over generations in early-modern Europe and to a lesser extent in Tokugawa Japan. In England, many of the first industrialists in the late eighteenth and early nineteenth century originated from or were financed by these established entrepreneurial families such as the Rothschilds (Crouzet 1985; Braudel 1992: 3:585–94; Brenner 1993: 51–91; Rose 2000: 66–79; Grassby 2001).

In China, successful entrepreneurial families’ propensity to transform themselves into gentry and state elite, together with the gentry and state elite’s relatively low propensity to transform themselves into entrepreneurs, limited the growth of the entrepreneurial elite’s size and power. As a result, the Qing commercial economy was marked by “weak firms in strong networks” in contrast to the “firm-based economy” grounded on enterprises operated by business dynasties in eighteenth-century England and nineteenth-century Japan (Reddings 1991; Hamilton 1999: 16–25). With the lack of a strong entrepreneurial elite who accumulated their financial and organizational capacity over generations, China was short of an agent competent in centralizing the abundant agrarian surplus and diverting it to costly and risky productive innovation.

Considering that the state and gentry elite in Qing China were in fact supportive of commerce and that the anticommercial variant of Confucianist ideology among the elite had been replaced by a pro-commercial variant in Qing times, it is puzzling why the entrepreneurial elite did not grow into a stronger group in Qing China. The answer to this puzzle lies in the empire’s peculiar class politics.

The Paternalist State Against Capitalism

Influenced by the Confucianist conviction of benevolent rule and paternalist protection of the weak, the Qing state was lenient toward tenant peasants and actively protected their livelihood against “rich but not benevolent” (weifu buren) landlords (Brenner and Isett 2002; Gao 2005: 17–76, 147–69), just like a loving father protects the younger siblings from the older ones’ bullying. The Qing state showed the same paternalist disposition when handling urban class conflict. For example, Qing officials stepped in to defuse the conflicts between workshop owners and workers who demanded wage increases by pressuring the owners to compromise with the workers. The government’s approach in containing such conflicts in textile workshops in Suzhou—the most prosperous commercial and production center of the Qing Empire—is illustrative.

Anhui businessmen controlled major cotton textile workshops operating in the city of Suzhou. These workshops were highly profitable because Suzhou’s textile industry commanded a colossal share of the empire-wide textile market (Fan 1998: 276–79; Li B. 2000: 80–85). But the industry was also plagued by recurrent conflicts between factory owners and workers (Yuan 1979). After several instances of large-scale labor unrest in the seventeenth and early eighteenth centuries, the local government intervened more often in resolving labor disputes. In adjudicating these disputes, government officials frequently invoked the metaphor of landlord–tenant relations. The workers’ duty of timely submission of finished products to the owners was compared to tenants’ duty of punctual rent payment. But at the same time local officials often reminded workshop owners of their obligation to provide stable employment to their workers, just as rural landlords should protect their tenants’ tenure and never expel them at will. When conflict seemed imminent, the local government attempted to preempt the outbreak of labor unrest by urging workshop owners to make concessions, such as raising wages and shortening the work day (Chiu 2002).

This conflict-containment strategy unintentionally increased the transaction cost that workshop owners had to bear if they attempted to attain economy of scale by hiring a greater number of workers. This heightened cost constituted a constraint that discouraged workshop owners from expanding their business into large-scale factory production. It gave them no other choice than to depend on a decentralized putting-out system grounded on peasant household production for most of the production process despite the existence of favorable conditions for large-scale manufacturing, including available technology, abundant labor power, and the existence of an empire-wide mass market for Suzhou textiles (Xu T. 1999; Chiu 2002; cf. Li 2000).

The Qing government’s paternalistic and accommodating approach to labor unrest stood in sharp contrast with the approach taken by the eighteenth-century English state, which was ever more aggressive in aiding the nascent industrial entrepreneurs by repressing labor unrest. Eric Hobsbawm notes that “as the [eighteenth] century progressed, the voice of the manufacturer increasingly became the voice of government,” and state support enabled the “innovating entrepreneur … [to] succeed in imposing himself” despite “the bulk of public opinion against him” (1952: 66–67). Since the mid–eighteenth century, the state had helped early industrial capitalists to enforce labor discipline by penalizing workers who refused to work as long as their employers wished and by regularly raiding workers’ homes to look for evidence of embezzlement (Marglin 1974; M. Mann 1993: 92–136).