Established in 1903, the Penang Chinese Chamber of Commerce was one of the pioneer trade organizations and the first Chinese chamber of commerce in Malaysia. Photo: FILE

---

 

The study of the history of commerce in China must follow more than general economic theory in order to reveal how commerce impacted and transformed the traditional social order. It must also examine changes in business policy, the social status of merchants, the scope of commercial activity and how commerce has influenced what was produced and supplied in various dynasties.
In history, China’s territory has gone through a process of continuous development and expansion. Commercial activities have also taken various forms, such as long-distance trade, regional surplus and shortage adjustment trade, and cross-border overseas trade, based on different regional conditions. However, as we date back to previous dynasties, we can see there were no famous merchants who stood out. This is because in ancient China, being a merchant was usually not held in high esteem, so merchants preferred to blend in.

Though some of the people who carried out commercial activities made it their lifelong profession, most of them saw the job as transitional and temporary and a means to earn a living. People who became rich liked to purchase land and property or invest in social welfare, which would not lead to social changes, but rather strengthen the traditional order. Therefore, it is necessary to study the history of commerce in China from both social and economic perspectives.

 

Status of merchants
In the traditional Chinese society, the concept of the four occupations of scholars, peasants, artisans and merchants had a profound impact on society. The ruling class upheld the policy of “encouraging agriculture and restraining commerce,” banning merchants or their children from taking the imperial examination, which effectively prevented them from participating in political power.

As a result, many people turned to business as a way to improve their economic situation, and as soon as it improved, they tried to abandon business and pursue a career in academics and politics. Thus, it can be seen that merchants were not a permanent or conspicuous occupation.

However, the status of merchants varied in different regions. For example, merchants in Fujian Province had a relatively high social status, and they often occupied the center of social life and had a say in local affairs. In the Ming and Qing dynasties, more Fujian merchants went abroad and brought commercial profits to their hometowns to set up education, charity and other public undertakings, driving the development of their hometowns. Through such acts of kindness, merchants built a good social image, helping them expand their business activities and social network. In other areas of China, the gentry often dominated local education, charity and other public services.

Also, since Fujian merchants demonstrated their contributions to local society and established their authority through participation in social affairs, they were better able to influence policies. For example, in the Ming and Qing dynasties, whether the court implemented a sea ban prohibiting all activities on the high seas was heavily influenced by the Fujian merchants.

 

Merchants, politics
Most merchants in traditional Chinese society maintained close relations with the government, and the size of their business was directly determined by whether they had an agent in the government. The commercial network was often a natural extension of social networks, so anthropologists can often find traces of commerce and trade through marriage and social circles.
In overseas trade, the fortunes of merchants were more directly related to the fate of the nation. During the Ming and Qing dynasties, the court adopted the sea ban policy for a long time. However, some of the wealthiest families in Fujian Province often worked behind the scenes and earned high profits, which depended heavily on the government’s support. There were also some enlightened officials who, from the perspective of people’s livelihood, would allow the common people some trading space to ensure normal production and life in coastal areas.

 

Commercial network
With the enlargement of the trade radius, merchants yearned for a cohesive network. After all, they had to face a strange living environment and diverse local conditions in foreign lands. In commercial cities, merchants from the same region tended to gather and form merchant guilds and chambers of commerce. Origin of birth, religious beliefs and dialects could all become cohesive bonds, and the network that built on them became an important guarantee for long-term commercial development.

Most of the groups formed by merchants developed into guilds and chambers, which often transcended their single economic function and took on the functions of social integration, cultural transmission and inheritance, and charity. The commercial guilds and chambers of commerce set up by merchants also needed the protection of fellow officials. Otherwise, they might face rigid exclusion from other local merchants or powerful forces.

Overseas merchants from Fujian and Guangdong provinces, who could not find the shelter of Chinese officials, often established good relations with local colonial authorities or the government of the host country. In fact, merchants needed to invest a large amount of profits in building networks and opening up business channels.

In Southeast Asia, the Americas and Europe, the Chinese chambers of commerce had become an indispensable bond for Chinese businessmen. Before the Western colonial powers entered the Indian Ocean, Chinese commercial networks had already been built, so the Western colonial powers used to largely rely on Chinese businessmen to expand trade.

 

Booming trade
Commercial activities in traditional Chinese society resulted in the exchange of products among different regions and accelerated regional and professional production. The Jiangnan region, south of the lower reaches of the Yangtze River, was the center of the silk and cotton textile industry, and Fujian and Guangdong Provinces were the center of the fruit and tobacco industries. The market-oriented tendency of production activities was evident.

Therefore, the traditional linear model of first agriculture, then handicraft industry and then commerce cannot summarize the path of commercial prosperity in Chinese society. The huge impact of commerce on agriculture and the handicraft industry should not be overlooked.
In 1567, the Ming Dynasty lifted the ban on sea trade, officially opening Yuegang, a small village in Haicheng County, Fujian Province, as a port for foreign trade.

Historical records showed that many Chinese goods were exported to the outside world through Yuegang Port, such as silk, ceramics and tea leaves, while China also imported a large number of foreign goods, proving that at this time the trade routes between China and Southeast Asia and between China and the Americas had been established.

The influence of commercial activities on production was often huge, which could make an ordinary object from one place a desirable item in another, and the added value of products was greatly enhanced. For example, the admiration from the European aristocracy for the exquisite products of the Chinese official handicraft industry led to many custom European orders. For a long time, Chinese goods were synonymous with high quality, thus generating higher profits.

 

Negative impact on land, livelihood
The Chinese people have long regarded real estate as the primary wealth. Land is believed to be the real wealth that cannot be stolen or robbed. Therefore, it is not hard to understand why many merchants used the wealth obtained through commercial activities to buy property and land, while somewhat overlooking production. This led to the expropriation of the farmers’ land by the unproductive rich, who often cared little about the harvest, a fatal blow to agricultural production.
Farmers cherished their land; however, as they became increasingly impoverished, land was often divided up and sold. The fragmentation of land made management inefficient, leading to food shortages. This was a side effect of traditional commerce in China.

The wealthy merchants lived an extravagant life and some used their fortune to exploit the poor, intensifying the polarization of the society and causing social contradictions. Merchants also used their wealth to generate fame and reputation, corrupting the imperial examination system and the bureaucracy, leading to political corruption and low administrative capacity. With the money in their hands, merchants practiced usury, pushing already poor borrowers quickly into inextricable trouble.

In sum, Chinese merchants in traditional society had multiple facets. Some earned a good name and invested heavily in public services and social charity. Some corrupted the bureaucratic system and influenced policy, exploiting the poor. On the whole, the study of the history of commerce in China needs to pay attention to social factors, so that we can make a correct judgment on merchants in the traditional society, objectively recognizing their progressiveness and limitations.

 

Wang Rigen is a professor of history at the College of Humanities at Xiamen University.

edited by YANG XUE