Economic Performance and Social Conflicts in Chinese History

• Main Author: Liu, Cong
• Other Authors: Fishback, Price V.
• Language: en_US
• Published: The University of Arizona. 2016
• Subjects: Fiscal Policies; International Trade; Political Groups; Regional Difference; Social Conflicts; Economics; Civil Wars
• Online Access: http://hdl.handle.net/10150/612424; http://arizona.openrepository.com/arizona/handle/10150/612424

This thesis consists of four chapters on economic performance and social conflicts in Chinese history. The first chapter examines the impact of a major tax reform on protests in the eighteenth century in China. The de jure effect of this reform was to increase the tax burden on the gentry and decrease the tax burden on commoners, yet the de facto effect is under debate. I combine multiple databases into an annual panel dataset from 1700 to 1750 and use detailed information on protest to identify income shocks and tax incidence. The regression results after controlling for provincial fixed effects and national shocks show that the tax reform increased local protests by 0.3 incidents per year, which equals to half a standard deviation before the reform started. Further examination suggests that the de facto effects of the reform hurt commoners rather than the gentry. First, it increased protests by commoners but had no effects on protests by the gentry. Second, provinces with more gentry landlords also had larger increases in the frequency of protests. These results support that the gentry managed to pass the increased tax burdens on to the commoners. This analysis provides quantitative evidence that links social standing and tax burdens in pre-modern society. The second chapter studies the effect of income shocks on different types of conflicts. I consider two types of conflicts: protests, such as grain crises, that requested actions by the government, and revolutionary activities that aimed to overthrow the central government. From 1902 to 1911, China experienced both types of conflicts. I use a detailed record of local conflicts to identify the causes and leaders of each conflict. Combining this information with exogenous price shocks from the international agricultural market, I find that negative income shocks coming from drops in the export price of tea and the increases in the import price of cotton tended to increase the overall frequency of conflicts in general and protests that requested actions from the government. However, the same negative income shocks sometimes reduced revolutionary activities, which was probably caused by the shortage of resources in organizing these activities. These finding suggest an ``income effect'' on conflicts, probably due to the resources needed to organize the activities. The third chapter examines the impact of civil wars on the local economy using newly documented information about civil wars across regions in early-twentieth century China. During this period, China was de facto divided into several regions. Each region was controlled by different warlords or political groups. Warlords fought with each other for a larger territory. I first quantitatively document the scale, timing, and location of these civil wars. Around sixty violent civil wars took place from 1911 to 1934 and 25% of the Chinese counties in my sample were involved in at least one battle. I then examine the impact of civil wars on local economic activities. I find that civil wars overall caused a small negative impact on international trade flows and a 12.1% drop in rural land values. When the results are separated into wars by political groups, the wars involving weak political groups led to 1.7% to 3.8% drop in international trade flows, while the ones by strong political groups had small positive impact on trade flows. Similarly, wars conducted by the powerful incumbent had no negative impact on land values, while the ones between the KMT and the CCP led to a 30% drop in land values. Combined with narrative evidence, the results suggest that incumbent or political groups might have protect trade or reduced harm to the local economy if they relied on tariff or land taxes to finance themselves. The fourth chapter examines the impact of World War I on the Chinese economy. The war largely increased the freight rates in international trade and decreased China's imports of manufactured products from the European countries. I combine data from multiple sources to quantify the development of China's industrial sector and changes in agricultural input prices during and after the war. The firm-level information from the textile industries shows that the textile firms expanded during the war, and the trend continued even after. Using John Buck's survey on land values and labor wages across China, I find that the growing industrial sector also raised agricultural input prices by increasing demand for raw cotton and rural laborers. However, the benefits were small and the impact was clustered around the ports.