What were the principal factors hindering China from industrialising during its Period of rapid economic growth from the 14 
to the 18 
century? Why was the West, in contrast to China, increasingly successful in developing a framework for later industrialisation during this period? 
The question of China’s
failure to industrialise between the fourteenth and the eighteenthcenturies and its subsequent economic eclipse by European states by the early nineteenthcentury, has been a topic of considerable interest among economic historians.
Theproblem of explaining the non-
industrialisation of China’s pre
-modern economy owes asmuch to the different approaches that scholars have taken, as well as to the differing levelsof emphasis placed on ideological, socio-economic or technological explanations. To thisend, this paper seeks to explain what were the main factors hindering China fromindustrialising by examining the principal theories and offers an approach that recognisesthe intersection of three dominant approaches that best explain why China did notexperience an indigenous industrial revolution.During the Song Dynasty (A.D 960-1279)
China’s pre
-modern economy had achievedsophisticated agrarian production that generated a sizable surplus. This surplus supportedan educated and capable bureaucracy and allowed for the wholesale mobilization of resources to undertake massive irrigation and other capital works projects.
China alsomanaged to achieve a high level of urbanization and considerable military forces, as well asproduce favorable conditions for technological development, commerce and a rural-basedproto-industrialisation that paralleled Europe until the nineteenth century.
It is no surprisethat
the relative strength of China’s medieval ec
onomy was based on centuries of relativestability that had its srcins in the early unification of the Chinese state during the QinDynasty in 221 B.C.
See, for example, Kenneth Pomeranz,
The Great Divergence: Europe, China and the Making of the Modern World  Economy
, Princeton University Press, Princeton, 2000; Gang Deng,
Pre-modern Chinese Economy: Structural Equilibrium and Capitalist Sterility
, Routledge, London, 1999; D.H Perkins
 , China’s Modern Economy in
 Historical Perspective
, Stanford University Press, Stanford, 1975 and Mark Elvin
 , The Pattern of the Chinese Past 
,Stanford University Press, Stanford, 1973
Justin Yifu Lin, “The Needham Puzzle: Why the Industrial Revolution Did not Originate in China,
 Economic Development and Cultural Change
, Vol. 43, No.2, 1995, pp.269-292, p.270.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”,
 Economic History Review
,Vol.53, No.1, 2000, pp.1-28, p. 3.
On the early srcins of the Chinese state see, for example, William McNeill,
The Rise of the West 
, The Universityof Chicago Press, Chicago, 1963, p.304-313.
The Chinese state developed an effective system of fiscal management and public resourceallocation through efforts such as the massive irrigation projects that increased theefficiency of agricultural yields. This success in building public infrastructure and theconstruction of a canal system, as well the establishment of paper money to better facilitatemarket exchange, is testimony to the progress that the Chinese economy had made towardcommercialisation by the end of the fourteenth century.
However, despite China’s economy
being apparently on the threshold of industrialisation it did not do so, instead maintaining alow growth rate and a weakened state apparatus that allowed the exogenous shocks of thenineteenth century
such as the forced opening up of China by European powers
toweaken Chinese sovereignty as foreign colonies were carved out of Ch
easternprovinces. How could this reversal of fortune transpire? Numerous hypotheses have beenproposed by scholars: most notably arguments that involve resource endowment (man-to-land ratio); socio-economic structures (role of the state and institutional formation); andthose involving ideology and values (normative approaches).This paper intends to investigate the main debate in pre-modern Chinese economic historywhich focuses on the key question of why China failed to advance its achievements under the Song Dynasty. The paper also attempts to understand, in relatively broad terms, whyChina fell short of its growth potential. The first section of this paper examines the role of 
technology and the state in China and looks at how China’s socio
-economic structurediverged from that of Europe. This section also investigates the relative merits of the
argument that ideology and values influenced China’s growth prospects.
The second part of the paper will look at the competing hypothesises of Mark Elvi
n’s ‘high level equilibrium trap’and Joseph Needham’s thesis that China’s bureaucratic state inhibited the emergence of 
mercantilist values and those values best suited for scientific research and technologicalinnovation.
The third section will focus on the economic divergence between China and
Europe and what were the general features that shaped Europe’s relative economic
imperial China. Finally, the conclusion will briefly assess the competingarguments and explain why the intersection of several factors is most likely the best
explanation of why China’s pre
-modern economy failed to industrialise.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”, p.2.
For a full account of Joseph Needham’s extensive research i
nto scientific inquiry in pre-modern China see his wellknown and much cited work,
Science and Civilisation in China
, Cambridge University Press, Cambridge, 1954.
The pre-modern Chinese economy was characterised by three distinctive economic types
customary, market and command
with each type having different mechanisms of resourceallocation. Within this complex economic system the customary and market systemsaccounted for around 60 per cent of economic activity, with the remaining 40 per cent being inthe state-run
sector that tended to use ‘command and control’ mechanisms to
Given that the level of commercialisation of the economy outstripped that of Europe during the middle ages, it is no small wonder that China excelled in the developmentof new technologies. These new technologies resulted in more efficient methods of production and labour saving techniques that freed up rural labour for occupationalspecialisation and encouraged investment in proto-industrial enterprises such as mining,manufacturing and ferrous metal production.
 During the Song Dynasty China saw a flurry of technological breakthroughs such as thewater powered spinning machine for textiles, the usage of coke to smelter iron, gunpowder,the compass, paper and the stirrup.
By pre-modern standards China had achieved a highdegree of commercialisation and urbanisation. The usage of paper currency and theestablishment of credit institutions existed in China earlier than in Europe. The constructionof long-distance transportation systems and waterway arteries, as well as the circulation of minted currencies, public investment in irrigation and drainage schemes and theintroduction of standard weights and measures, acted to lower transaction costs andsupported a non-agricultural population of around 20 per cent of the population.
 Related to these points is the structure of China from the Song Dynasty to the eighteenthcentury.
China’s feudal structure differed from Europe’s which was
based on a specialistmilitary class granted land and control over labour, in exchange for martial services.
Kent Deng, “Development and its Deadlock in Imperial China, 221 B.C – 
1840 A.D”,
 Economic Development and Cultural Change
, Vol.51, No.2, 2003, pp.479-522, pp.480-481.
Robert Hartwell, “Markets, Technology and the Structure of Enterprise in the Development of the EleventhCentury Chinese Iron and Steel Industry”,
The Journal of Economic History
, Vol.26, No.1, 1966, pp.29-58, p.31-32.According to most scholars, China managed to reach a total annual output of iron of around 150,000 tons by thethirteenth century. During the Song Dynasty large quantities of heavy iron coins were minted for circulation, butbecause of their weight they were used as ingots, not currency tokens. The expansion of Chinese ironworks,especially in the north of the country from the eleventh to the fourteenth century, was achieved through theorganization of large-scale smelting operations servicing large metropolitan markets and capturing the benefits of economies of scale. This resulted in lower per unit cost with the relative cost of iron experiencing a decline similarto that experienced by British industry during
the nineteenth century. Kent Deng, “A Critical Survey of RecentResearch in Chinese Economic History”, p.3 and Robert Hartwell, “Markets, Technology and the Structure of 
Enterprise in the Development of the Eleventh Century Chinese Iron and Steel Industr
y”, p. 33.
David Landes
, “Why Europe and the West? Why not China?”,
 Journal of Economic Perspectives
, Vol.20, No.2,Spring 2006, pp.3-22, p.5.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”, p.2.
Chinese feudalism, by contrast, captured the externality of defence through statemonopolisation of military power, rather than having feudal magnates provide militaryservice for the state. The result of this was to lessen the necessity of tying labour to the landfor defence and encouraged a free peasant
“class of adaptable, rational, profit
petty entrepreneurs”
who engaged in cottage industries and traded their surplus produce atlocal markets that were connected in a web of national rice and grain markets.
Accordingto Kent Deng, the condition of private ownership and basic property rights existed in Chinaas early as the sixth century B.C, despite some scholars suggesting that such institutionalarrangements were uniquely European.
Hence it is generally
agreed that China’s
economy by the fourteenth century experienced growth rates higher than its Europeancontemporaries and generated a sizable agricultural surplus (including a tradable sector accounting for around 60 per cent of GDP
) that supported a large specialist urbanpopulation and a set of domestic institutions that had some of the hallmarks of facilitatingmodern economic growth.Given the arguments regarding why China failed to take the next step from being aninnovator and highly commercialised society to an industrialising one, it is necessary toexplain the role of the state and Confucian ideology which supported stability and socialorder over competition and contestability. According to both Deng and Landes
, the role of the state in pre-modern China acted to narrow the possibility for competitive institutionalprocesses as the centralised state monopolised control over domestic institutions (unlikethe Parliaments of Europe) and discouraged the accumulation of capital among individuals,resulting in a lowering of domestic competition and incentive.
main externalcompetitors were generally weak in capacity and steppe-based with ill-equipped and under 
 N. Sivin, “Imperial China: Has Its Present Past a Future?”,
 Harvard Journal of Asiatic Studies
, Vol.38, No.2,1978, pp.449-480, p.452.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”, p.11. Deng makes the pointthat Imperial China’s economy was
fundamentally private with much of the land held by free peasants whoexercised rational choices and participated in the rural market economy. He further argues that the Chineselandholding system generated strong incentives for the farmer to stay in agriculture as he reaped a high return on hisinvestment (both capital and labour) and this manifested itself in the high rates of land ownership right up to the1930s where at least 70 per cent of rural households belong to the category of freeholder. The propensity towardlandholding gave the Chinese peasant-cultivator strong incentives to produce more, a point important for the pre-modern Chinese economy as regular surplus production (ie. high yield farming) appears to have been commonplaceduring Song times. Similarly, agricultural seasonality, which lowered the marginal product of labour in farming tozero during low seasons, created an incentive for peasants to engage in cottage industry and produce goods formarket exchange to supplement the reduction in agrarian income.
Kent Deng, “Development and its Deadlock in
Imperial China, 221 B.C
1840 A.D”, p.494.
., p.481.
and David Landes,
“Why Europe and the West? Why not China?”, p,8.
resourced forces
. This lack of external competition did not encourage the innovation of Chinese weaponry, for example, a point later found out by the Jesuits who built Europeancannon for China to replace the medieval weaponry still in use during the seventeenthcentury.
  As Albert Feuerwerker points out in his investigation of the economy of late imperial China,it was during the Song Dynasty that
the “hierarchies of wealth, political power, and social
…were dominated by elite lineages”, many of wh
ich aspired to careers in the imperialbureaucracy.
The argument advanced here is that the state tended to draw-in the bestand most motivated individuals and, as a function of bureaucratic politics and individualenrichment, engaged in rent-seeking behaviour. This behaviour imposed high costs onmarket transactions and diverting scarce talent toward state-based employment. This viewregarding the Chinese state has been cited by numerous scholars and is sometimes
referred to as the ‘Asiatic mode of production’ in Marxian literature.
In essence, theunderlying assumption is that the Chinese state was highly efficient in expropriatingresources from the economy and diverting them for elite consumption, along with animperial bureaucracy that was motivated by Confucian suspicion of mercantilist activity andsometimes employed coercion in limiting competition.
 Some commentators, however, have advanced arguments against the view that theChinese state was predatory and rent-seeking. Kent Deng posits that the
re is “plenty of evidence to suggest that the Chinese state was benign and weak” and he goes onto
mention that if such rent-seeking existed it evidently did not significantly reduce economicgrowth during the middle ages as the economy continued to flourish and support aburgeoning market in services such as in the arts, sciences and in transport.
Given thescope of commercial activity, we must assume either that the anti-market policies of thestate were cancelled out by the market, or that the state was persuaded to be friendly tomarkets in exchange for increased taxation revenue.
Notable exception here was the threat posed to the Ming Dynasty by the Manchus who overthrow the dynastyduring the mid-seventeenth century.
David Landes,
The Wealth and Poverty of Nations
, Oxford University Press, Oxford, 1998, p.340. The impetus of inter-state competition in driving change in the domestic economy and in making revenue policy more efficient, aswell as encouraging the development of credit markets to ensure investment capital in the military sector, iselaborated in William McNeil,
The Pursuit of Power: Technology, Armed Force, and Society since A.D 1000
,Chicago University Press, Chicago, 1982.
Albert Feuerwerker, “The State and Economy in Imperial China”,
Theory and Society
, Vol.13, No.3, 1984,pp.297-326, p.308.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”, P.18.
, pp.18-19.
Kent Deng, “A Critical Survey of Recent Research in Chinese Economic History”, p.19. Also see AlbertFeuerwerker, “The State and Economy in Imperial China”, pp.298
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