Chinese Economic Developments

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AP Theme

Economic Systems

Learning Objective

Explain the effects of innovation on the Chinese economy over time. 

Historical Development 1

The economy of Song China became increasingly commercialized while continuing to depend on free peasant and artisan labor.


Historical Development 2

The economy of Song China flourished due to increased production, expanding trade networks, and innovations in agriculture and manufacturing.

Historical Development 3

China’s commercial economy produced technological innovations that shaped developments across global regions.


Commercialization in Song Dynasty China

The Song dynasty continued the commercial and technological success (960–1279) from previous Chinese dynasties. As the economy continued to commercialize, China became the most urbanized place in the world. China’s economic success resulted from various technological innovations that allowed China to produce and trade foods and goods more quickly and efficiently. Chinese technological innovation during this period reshaped the world as technological advances diffused west along international trade routes.

What is Commercialization?

Commercialization is the development of businesses and markets where merchants sell goods for profit on a large scale. In non-commercialized economies, families produce products for personal consumption, or goods are produced and sold at a small scale.

Key Term: Commercialization

Commercialization is the development of business and markets where merchants sell goods for profit on a large scale. In non-commercialized economies, families produce products for personal consumption, or goods are produced and sold at a small scale.

What Did Commercialization Look Like in the Song Dynasty China?

Song Dynasty China was one of the most developed and prosperous commercial centers globally. As urban centers grew during the Song dynasty, urban areas depended on trade and commerce to import staple products such as rice and export luxury goods like silk and porcelain for profit. It became increasingly common for merchants to sell both agriculture and non-agricultural goods in markets. Trade within rural areas also expanded. However, despite growing commercialization, most of China’s population remained poor and worked in agricultural production or as craftspeople in rural areas.

  • China was also one of the most urbanized places in the world. 
  • The Song capital city of Hangzhou numbered over 1 million people, and dozens of other cities numbered had populations in the hundreds of thousands. 
  • A Chinese writer vividly described Hangzhou in 1235. His description included specialized markets that sold various food products and manufactured goods such as books, silk, and porcelains. 
  • Hangzhou had a thriving restaurant and bar scene. 
  • There were inns of varied sorts. Those with red lanterns meant that prostitutes were available inside. 
  • The city had multiple schools for the study of Confucianism and the arts, such as music.
  • Clubs were available for citizens with varied interests like Buddhism, fitness, fishing, and poetry.
  •  Italian explorer Marco Polo, who visited Hangzhou in the 13th century, described the city as “beyond dispute the finest and noblest city in the world.”

What Were the Causes of Chinese Commercialization?

The economy of the Song dynasty flourished as a result of increased production. Chinese commercialization resulted from innovations in Chinese production methods, new technologies, and innovations in finance (money) systems during the Tang (618-907) and Song dynasties.

What Were the Effects Did Chinese Commercialization Globally?

Increasing commercialization impacted both China and the world. During both the Tang and Song dynasties, China produced significant scientific and technological innovations that would diffuse widely globally on long-distance trade routes. The transfer of Chinese technological innovations was not a quick process. It often took hundreds or thousands of years before making its way into the western world, usually via India, Central Asia, and the Middle-Eastern societies. As Chinese innovations spread, communities adopted and modified the technologies.

Chinese Technologies Spread Around the World


The Chinese invented papermaking in the second century BCE. The technology slowly spread west. It entered Muslim Spain in the 12th century before being adopted within Christian Europe in the 14th and 15th centuries--a lag time of nearly 1400 years.

Moveable type printing

Movable woodblock printing developed in China in the 11th century. The Gutenberg printing press in Europe began production in 1436--a much shorter 400 year lag time before western adoption. The printing press arrived in Europe just as European society was undergoing rapid changes from the collapse of feudalism, increasing commercialization, and a revival of interest in the arts, mathematics, and the sciences. Cheaper and easy printing allowed for the quicker diffusion of knowledge across the continent.


Gunpowder would prove to be one of the most disruptive global innovations. Invented accidentally by Chinese alchemists in the 10th century, gunpowder reached the west by the 13th century. Europeans mastered its use and used it to conquer much of the world by the dawn of the 20th century.

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