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Nov 8, 2017 in Economics

China’s Traditional Economy


André (2003) defines traditional economy as a situation where distribution of the available capital is based on inheritance. It is a strong economic presumption that consists of well established communal set up and it generally operates on prehistoric practices and beliefs. There are features that are characteristic of china’s traditional economy as observed in the following discussion.

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First, the economy was preindustrial in the sense that it was rural agriculture based economy. This economy relied on human labor and animals that provided the work force needed on the farms. Additionally the net product out put from this economy was too low to sustain the population and trigger the required quick economic development (André, 2003). In traditional economy, the larger section of the population lived in the rural areas and worked on agricultural fields. On top of the above features, in this type of economy, peoples’ economic status was very unpredictable with the uncertainties brought about by a number of factors that includes the demand of farm products, the local authorities’ way of life and changes in seasons.

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Better still in the prehistoric era china’s economy underwent a massive civilization that lead to sufficiency in agricultural production to supersede the basic needs of families that practiced agriculture to also provide the city settlements with food, main civic works, active scholars, widespread administrative organizations and standing armies. China’s traditional economy has had the world’s most advanced civilization for centuries as evidenced by greater achievements in governance, literature, production technology, science and art. Unfortunately this success in economy by China in traditional was time and again disturbed by wars (André, 2003).

Apart from agriculture, the Chinese traditional economy was also characterized by trade. The Chinese people ferried silk to the west and imported gold. This economy was also characterized by the use of metal made to look like cowrie shells, and then metal ornamental chains of beads referred to as cash which was used as a medium of exchange for goods and services. This was replaced by paper money in 100 AD among Sung Dynasty. Lastly the important industry that characterized the china’s traditional economy was early mining. This was done among the Han Dynasty where people started operating salt mining businesses; the salt was sold. The major source of labor in mines was majorly by the slaves.


In conclusion, china’s traditional economy was mainly agriculture based. This was later civilized to improve the agricultural production, an achievement that was contributed to by good governance and improved production technology among other factors. Trade of salt from early mining industries and wheat and rice from agriculture took place with the use of metals made to look like cowrie shells, metal ornamental chains as a medium. These were later replaced by paper money.

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