A History of Volume 1 Chinese Thoughts Public Finance on b2530 International Strategic Relations and China’s National Security: World at the Crossroads TTTThhhhiiiissss ppppaaaaggggeeee iiiinnnntttteeeennnnttttiiiioooonnnnaaaallllllllyyyy lllleeeefffftttt bbbbllllaaaannnnkkkk b2530_FM.indd 6 01-Sep-16 11:03:06 AM A History of Volume 1 Chinese Thoughts Public Finance on Wenxue Sun • Haipeng Qi Dongbei University of Finance and Economics, China World Scientific NEW JERSEY • LONDON • SINGAPORE • BEIJING • SHANGHAI • HONG KONG • TAIPEI • CHENNAI • TOKYO Published by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore 596224 USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Names: Sun, Wenxue, author. | Qi, Haipeng, 1962– author. Title: A history of Chinese thoughts on public finance / Wenxue Sun, Haipeng Qi, Dongbei University, China. Description: USA : World Scientific, 2021– | Includes bibliographical references. | Contents: v. 1. A history of Chinese thoughts on public finance -- v. 2. A history of Chinese thoughts on public finance. Identifiers: LCCN 2020045097 (print) | ISBN 9789811216794 (set) | ISBN 9789811227004 (v. 1 ; hardcover) | ISBN 9789811227011 (v. 2 ; hardcover) | ISBN 9789811226663 (set ; ebook for institutions) | ISBN 9789811226670 (set ; ebook for individuals) Subjects: LCSH: Finance, Public--China--History. Classification: LCC HJ1401 .S866 2021 (print) | LCC HJ1401 (ebook) | DDC 336.001--dc23 LC record available at https://lccn.loc.gov/2020045097 LC ebook record available at https://lccn.loc.gov/2020045098 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. This book is published with the financial support of the Chinese Fund for the Humanities and Social Sciences. 〈〈中国财政思想史〉〉 Originally published in Chinese by the Shanghai Jiao Tong University Press Copyright © the Shanghai Jiao Tong University Press, 2015 Copyright © 2021 by World Scientific Publishing Co. Pte. Ltd. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the publisher. For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher. For any available supplementary material, please visit https://www.worldscientific.com/worldscibooks/10.1142/11731#t=suppl Desk Editors: Balamurugan Rajendran/Nicole Ong Typeset by Stallion Press Email: [email protected] Printed in Singapore BBaallaammuurruuggaann -- 1111773311 -- AA HHiissttoorryy ooff CChhiinneessee TThhoouugghhttss oonn PPuubblliicc FFiinnaannccee..iinndddd 11 2266//1100//22002200 99::5588::5511 aamm 6"×9" b3937-v1 A History of Chinese Thoughts on Public Finance Preface It was pointed out by Frederick Engels that “The point where this history begins must also be the starting point of the train of thought, and its fur- ther progress will be simply the reflection, in abstract and theoretically consistent form, of the historical course. Though the reflection is cor- rected, it is corrected in accordance with laws provided by the actual historical course, since each factor can be examined at the stage of devel- opment where it reaches its full maturity, its classical form.”1 The history of financial activities in China started from the Xia Dynasty around the 21st century BCE, as can be testified by recordings from Sima Qian the great historian: “A tax and contribution system was basically in place by the time of Emperor Yu and the Xia Dynasty that came immediately afterwards.”2 This marked the beginning of rational thinking in China about the nature of revenues and the corresponding ways for raising them. Over the next 4,000 plus years, this thinking developed consistently from its simple and crude form into highly sophisticated and diversified sys- tems, witnessing a succession of reforms and changes, through which the thoughts on public finance of slave owners, feudal landlords and capital- ists during the semi-feudal, semi-colonial period were each replaced in turn by newer ideas and eventually ushered in the socialist thoughts on public finance of the present. The ups and downs of historical evolution 1 Frederick Engels, A Critique of Political Economy by Karl Marx. Marx & Engels Selected Works (Volume 1), p. 122. 2 “The Historian’s Remarks,” Annals of the Xia Dynasty 2, in Shiji (Records of the Historian) (Volume 2). v b3937-v1_FM.indd 5 04-11-2020 20:16:12 b3937-v1 A History of Chinese Thoughts on Public Finance 6"×9" vi A History of Chinese Thoughts on Public Finance have never erased the continuity of our thoughts on finance, nor has the replacement of each dynasty by another one stopped the later ones from taking up and passing on the sound ideas and practices of their predeces- sors. The thoughts on public finance of each previous dynasty often turned out to be the foundation for those of the new ruling classes, who drew lessons from those ousted by them to bring their own systems into higher stages of development. It was exactly through this non-stop pro- cess of inheritance and upgrading that the treasures of traditional Chinese wisdom concerning finance have been accumulated and passed down generation after generation, creating in the end the sparkling gems unique to Chinese national culture, and meanwhile also making them parts of the fine collections in the treasure houses of world cultures. By the time of Emperor Yu and the Xia Dynasty, China was already in the period of slavery society, in which the ruling class not only owned slaves but also claimed various taxes and contributions from the ordinary people within their own tribe as well as those from other tribes. This was done originally on the basis of the ruling class’s personal preferences in a random manner, but gradually evolved into a fixed pattern, and in the long run settled down as a relatively stable revenue system, as recorded in Shangshu (the Book of History). To match the dominating revenue sys- tems then, some preliminary thoughts concerning finance also occurred in the same period, though, due to the limits of the time, most of these ideas existed only through word of mouth. It was not until the Spring and Autumn Period that such ideas as financial categories, financial systems, etc., were gradually sorted out in a systematic manner and recorded on bamboo slips to be passed on. Quite a few of the classical works about ancient China, the Book of Changes, the Book of History, the Book of Rites and the Book of Songs, to name just a few, were all compiled and recorded on bamboo slips during this period, each of them containing certain sec- tions relevant to the financial activities of the time. In particular, the Book of Rites provides us with rich information about the corresponding imple- menting agencies and regulations, due to which Wang Anshi, a high- ranking official during the Song Dynasty, made his much quoted comment: “Half of the Book of Rites addresses the issue of finance.”3 Given that most of the knowledge about these times was spread first orally and then sorted out by later generations to be recorded on bamboo slips, distortions 3 Wang Anshi, A Letter in Reply to Zen Gongli, The Collected Works of Linchuan (Volume 70). b3937-v1_FM.indd 6 04-11-2020 20:16:12 6"×9" b3937-v1 A History of Chinese Thoughts on Public Finance Preface vii and mistakes were somehow inevitable. Nevertheless, these classical works have been verified throughout history by historians and archeolo- gists as basically conforming to historical facts and therefore are mostly reliable. The financial activities recorded in them were still of a primitive nature, and the corresponding financial perspectives are mostly quite simple and crude, marking just the very beginning of Chinese thoughts on public finance, but they did lay down a solid foundation for the future thriving of the field. As the country entered the stage of feudalism and the corresponding financial systems were continually transformed, the Chinese thoughts on public finance also steadily matured. The emergence of shihuo (food & trading), two concepts initially put forward by Ban Gu during the Eastern Han Dynasty to refer to people’s basic needs for food and clothing, marked the fact that China had embarked on a journey to explore the nature of finance from theorized perspectives. In particular, in the years following the Song Dynasty, systematic and specialized elaborations about finance began to thrive, replacing the previous miscellaneous per- spectives on finance that were typically found only in the state laws, codes and regulations or in the proposals and commentaries filed by court offi- cials to the emperors concerning state governance. Shihuolun (On Food and Trading) written by Zhang Fangping could be taken as the first spe- cialized Chinese work on finance, and Caiji (On Fiscal Management) by Ye Shi the first specialized monograph in the country. By the Ming Dynasty, Qiu Rui wrote a book entitled Zhiguoyong (On the Management of State Endowments), which was almost comparable to a modern Finance course book for the feudal society. Following the trendsetting Shihuozhi (Chronicles about Food and Trading) in the Book of the Han Dynasty, almost all history books compiled thereafter, be they authentic or anec- dotal, national or local, contained a specialized section on the theme of shihuozhi, which in effect became like China’s age-honored Financial History. Even though some theories covered in these records still fell short due to their simplicity, partiality and relative insufficiency in insights, they did pass as some rational reflections on the financial prob- lems faced in their respective times and hence demonstrated noticeable features of sophisticated theories. During those periods, the Chinese financial perspectives were unparalleled worldwide, projecting tremen- dous influence in the international arena as they spread to other countries through extensive exchanges between officials, merchants, religious mis- sionaries as well as other civilians. b3937-v1_FM.indd 7 04-11-2020 20:16:12 b3937-v1 A History of Chinese Thoughts on Public Finance 6"×9" viii A History of Chinese Thoughts on Public Finance However, in the wake of the later part of the 18th century when China’s feudal economies started to decline and its feudal rulers became increasingly more corrupt, the thoughts on public finance of the country’s ruling landlords also came to an end. The major capitalist countries in the western world, empowered by the competitive advantages brought to them by the Industrial Revolution, set out on their journey for primary capital accumulation through plundering the resources of their colonies. Tempted by their unquenchable desire for the rich natural endowments of China and equipped with advanced weapons for killing, these colonial imperialists intruded into Chinese territories and forced the corrupt gov- ernment of the Qing Dynasty to open its coastal ports, to give up its lands and hand over compensational funds, hence gradually reducing China into a semi-feudal, semi-colonial society. In the face of impending national doom, the Chinese intellectuals of that time began to look for ways to rejuvenate the economy as well as the military forces of the country by turning to the rest of the world, especially the western countries, and learning the advanced science, technologies and management approaches of the latter. Capitalism theories and thoughts in the meanwhile found their ways into China, paving the way for the emergence of Chinese-style capitalism thoughts on public finance. By this time, some new visions had been added into and in turn enriched China’s traditional wisdom concern- ing finance, the results of which remained effective until the founding of the People’s Republic of China in 1949. This book, divided into three parts, provides a chronological record of the development of Chinese thoughts on public finance over its 4,000+ year history that ranges from the Xia Dynasty to the founding of the new China in 1949. The first part addresses the onset and evolution of Chinese thoughts on public finance during its ancient period, which lasted roughly 3,000 years, ranging from the 21st century BCE through 960 CE when the Northern Song Dynasty was established. It provides a holistic description about the thoughts on public finance of the slavery society during the Xia, the Shang, the Western Zhou Dynasties and the Spring and Autumn Period, which is then followed by an introduction of the early feudalist thoughts on public finance during the Warring States Period through the Qin, the Han, the Three Kingdoms Era, the Jin Dynasties, the Southern and Northern Dynasties, the Sui Dynasty to the Tang Dynasty. The second part offers an account of the thriving and declining of China’s ancient thoughts on public finance. Covering a roughly 880-year period that b3937-v1_FM.indd 8 04-11-2020 20:16:12 6"×9" b3937-v1 A History of Chinese Thoughts on Public Finance Preface ix began at 960 CE and ended in the early Qing Dynasty (around the First Opium War in 1840), this part provides a detailed survey about the thoughts on public finance of the Song, the Liao, the Jin, the Yuan and the Ming Dynasties and those of the early Qing Dynasty. The third part deals with the emergence and development of capitalist thoughts on public finance in China over approximately 110 years that range from the late Qing Dynasty to the founding of the People’s Republic of China (on October 1, 1949), with details about the respective thoughts on public finance of the late Qing Dynasty, the Beiyang Government Era and the Nanjing National Government Era of the Republic of China. The reason for breaking the whole book into these three parts is to ensure that our description matches the historical evolution of the thoughts. Specifically speaking, there are three reasons for doing it this way: 1) As is commonly known, the thoughts on public finance of a given period are often closely tied to the financial systems adopted during the same period. Prior to the late Tang Dynasty, when the Liangshuifa (Dual Taxes Policy) was introduced, the financial systems basically belonged to either of the two principal types, namely, land taxes and capitation taxes. As a result, the dominating thoughts on public finance during this period were also primarily based on these two types. After the adoption of the Dual Taxes Policy, the prevalent financial systems became land taxes and property taxes, with the focus of thoughts on public finance duly shifted to these two types. Judged from this aspect, the thoughts on public finance of the Tang Dynasty when the Liangshuifa (Dual Taxes Policy) was already introduced should obviously be included in the second part. But given that the Dual Taxes Policy was still just in its early stage and highly controversial at that time, and also for the sake of convenience of descrip- tion, we nevertheless put the Tang Dynasty in the first part. 2) The thoughts on public finance prior to the Song Dynasty were typically still in their early stages of development and could hardly be said to have reached their flourishing stage. Even though the concepts put forward by Ban Gu marked the onset of a brand new era in the history of Chinese thoughts on public finance, his concepts were not yet extensively acknowledged as being authoritative for a fairly long period. It was not until the Song Dynasty that the concept of shihuo became widely accepted and elaborations about the thoughts on public finance became more sys- tematic. Therefore, it is more reasonable to conclude that it was the Song Dynasty that marked the real turning point in China’s thoughts on public finance. 3) It should be pointed out that the thoughts on public finance b3937-v1_FM.indd 9 04-11-2020 20:16:12