Economy of Ancient China






Towns and cities


Further study



Ancient China‘s economy, like all economies at that time (which had advanced beyond the hunter-gatherer stage), were based on agriculture. The vast majority of Chinese families lived in small farming villages, of a dozen or so families.

The increasingly productive farming economy of China provided the foundations for the development of one of the great civilizations of world history: trade and industry expanded, new social classes emerged, political institutions became more complex, culture grew in sophistication. Out of this complex mix of elements would come some of the most important technological advances in world history. However, agriculture remained at the root of Chinese civilization. Up to the late 20th century, the vast majority of the people gained their livelihood from farming.



The great majority of the people of Ancient China lived in farming villages, carrying out a host of tasks to grow their crops – sowing, ploughing, weeding, harvesting, storing  – and keeping themselves fed, clothed and housed – milling and baking bread, fermenting wine, processing silk, spinning and cloth, and so on. They also were regularly called upon to undertake communal tasks such as constructing terraces and dykes, digging water channels, and as corvée labor, working on major public works such as city walls and royal palaces.

Staple crops

There were two staple crops in Ancient China. In northern China, its was millet, and in the Yangtze basin and southern China it was rice. The Yangtze basin was the earliest home of domesticated rice, and it was here that wet-rice cultivation in flooded paddy fields was pioneered.

In Shang and early Zhou times, cattle, sheep and goats were important in the economy; the aristocracy also indulged in great hunting expeditions, for both food, enjoyment and as practice for war.

In the late Shang period (late second millennium BCE) soya beans spread to northern China, adding a valuable source of nutrition in the the diet.

Agricultural Intensification

From mid-Zhou times, there was an intensification of agriculture in northern China. Large-scale irrigation schemes brought more land under cultivation. Human waste began to be used as a fertilizer.

Field rotation also came into use, to keep the soil productive. Animal-drawn ploughs allowed soil to be turned more quickly, and the wider use of iron ploughs from the 5th century BCE onwards allowed the soil to be turned more deeply. Iron axes and hoes helped the clearing of new ground for cultivation.

Animals crowded out

As population densities increased, animals became less important. They were literally crowded out as farmers focussed more on the intensive cultivation of crops, the better to feed their growing numbers.

The main animals still to be found on the farms were oxen (used for ploughing and transport), pigs (which were efficient scavengers and could largely look after themselves) and chickens. The great hunting expeditions became a thing of the past.

Government support

The need for taxes encouraged princes and their advisors to pay attention to their states’ resources. The most famous example is in the state of Qin, which in the fourth century ordered the clearing of new land for farming on a huge scale, and inaugurated drainage and irrigation projects to increase agricultural productivity.

These policies were carried over into the early imperial period. The political stability of the Han dynasty allowed farming to expand into new lands, notably with the settlement of regions near the northern frontiers, to help supply the Han armies there. The Han also sponsored the dissemination of new farming techniques and inventions. The spread of iron tools was stepped up, and during this period the seed drill and the wheelbarrow were developed.



As in all other societies of the time, the vast bulk of manufacturing activity took place in small units, the homes of craftsmen and farmers. It was here that food was processed, textiles were spun and woven, clothes sown, silk was produced, butter, cheeses and other dairy products were

The introduction of the use of iron was a major step forward for manufacturing.

Iron objects are much easier and cheaper to produce than bronze ones, because whereas iron is found in many places in the earth, copper and tin are not nearly so widespread, and also have to be carefully alloyed together to make bronze. Whereas bronze was used mainly in weapons and decorative objects – that is, used only by kings and priests, lords, priests and high officials – iron could be used much more widely. Iron tools enabled farmers to become much more productive.

Large-scale production

From mid-Zhou times onwards some large-scale manufacturing units began to appear: there are reports of iron smelting works employing more than 200 workmen. Continual experimentation led to major technological advances. Most notably, the Chinese developed larger and better designed kilns, which led to the invention of steel, more than a thousand years before the West. Weapons – including the newfangled crossbow – and armour were produced at state factories.



Trade routes spanned China in early Shang dynasty times, but it was from mid-Zhou times that commerce expanded markedly. State governments became active promoters of trade and industry.

State aid

Metal coinage was introduced into China in the late 5th century BCE, and circulated more and more widely. This facilitated trade, and the expansion of trade led to the emergence of new towns and cities, and the expansion of older ones, which ceased to be just administrative centres and became centres of industry and commerce as well.

The urban classes of merchants and craftsmen increased in numbers, and became wealthier and more important.


The standardization of coinage, road widths, weights and measures, and the script under the short-lived Qin dynasty will have undoubtedly given a significant boost to commerce throughout the Chinese world, but it was the far longer-lived Han dynasty which benefitted from this. The peace which this dynasty brought China stimulated commerce further. Long-distance trade across the Han empire expanded particularly strongly, with wholesale brokers in grain and salt becoming extremely wealthy.

International Trade

During the Han period international trade took on a completely new dimension. By imposing their control over the eastern steppes of central Asia, the Han allowed the Silk Road, that great trade route between China and the Middle East, to become firmly established.

Horses for silk

Many luxury and exotic goods travelled along this route, but the chief commodities were silks, sold by the Chinese in exchange for horses, which they were in constant need of. Try as they might, they could not breed the sturdy steppe ponies in sufficient quality or quantity within China proper because of its lack of broad grasslands.

Trade by sea

At the same time, the Han conquest of south China opened up the maritime trade to south east Asia. Although the south remained an underpopulated frontier zone (at least so far as the Chinese were concerned; perhaps the indigenous inhabitants of the region thought otherwise), a few important ports were established on the coast. It was in this period that Canton began its long history as a centre of international commerce.

Seagoing trade largely remained in the hands of foreign merchants and seamen, mostly Indians and Arabs. Chinese businessmen, however, benefited from the handling of goods for import and export, and the increased internal trade that foreign trade always brings.


Towns and cities

The archaeological evidence shows that the first cities appeared in northern China in the late third/early second millennium BCE – i.e at the time of the Shang dynasty. These cities were many times bigger than even the largest villages which had come before; they contained palaces and temples, and were surrounded by large walls made from beaten earth.

Near the palace were the workshops of many skilled craftsmen, who provided the king and his court with the beautiful objects – amongst them some of the most beautiful bronze vessels ever produced – with which they surrounded themselves.

Centes of power

rLarge cities such as this were presumably the capitals of the Shang state (seven succeeded one another during the Shang period). Such cities also flourished under the early Zhou, but numerous new cities were also founded as centers of Zhou power across northern China.

Most of these were originally not large. They were essentially small walled forts occupied by a regional lord, his followers and their families, and artisans and traders who supplied their needs.


In middle Zhou times (c. 800 – 500 BCE), as population and wealth increased markedly, many of these towns grew in size as industrial and commercial centres. They housed a growing class of traders and artisans.

This process accelerated in the later Zhou period (c. 500-250 BCE) as economic expansion continued apace. Towns became more numerous, some functioning primarily as commercial and artisanal centres rather than as administrative centres. This period saw the merchant class especially became more numerous, wealthier and more influential as a class.

Han dynasty cities

This development continued under the Han dynasty. It is estimated that Han China had twelve or so cities with 50,000 or more inhabitants. The capital of the early Han, Chang’an, had a quarter of a million inhabitants, and of the later Han, Loyang, half a million – both amongst the largest cities in the world at that time. Peace and stability resulted in economic expansion, to the advantage of the urban classes. Some Han merchants became extremely wealthy indeed, especially those in the iron and salt industries, and wholesale grain merchants.



In comparison with any other region of the ancient world, China was extremely inventive. In the above discussion of the economy of ancient China we have had occasion to mention the development of steel, the crossbow, the wheelbarrow and the seed drill.


Another notable invention was paper. This occurred at the imperial court of the Late Han. Paper solved a major problem which the bureaucracy experienced. Up until that time, bamboo strips, sewn together and rolled into scrolls, were used for documents. These were awkward to make and heavy to carry about. Silk was sometimes used for important documents but was far too expensive for everyday use.

Paper was cheap and simple to manufacture, and very portable. Soon its use was spreading rapidly throughout China.


Further study  

Click here for an overview of the geography and history of Ancient China.

Click here for an overview of the history of China through to the early 20th century.

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