| During the late medieval age, the transformation of the Chinese imperial military system led to the formation of the "financial state," which in turn shaped the economic development in Jiangnan, the most prosperous region in China. In order to crush the An Lushan rebellion that occurred in the mid-eighth century, the Tang dynasty was forced to use newly recruited professional armies to replace its dysfunctional self-supporting peasant militia. Since supplying large professional troops demanded unprecedented military budget, the imperial state adopted aggressive mercantile policies to enlarge its revenue base. In the later dynasties that adopted professional army system, therefore, the government took initiatives to build a sophisticated paddy fields system in Jiangnan as the "physical container" for the most productive agriculture in the pre-modern world. The long distance transportation of military supplies underwritten by merchants created a complex national trade network. Eventually, Jiangnan economy developed into a highly urbanized agrarian system, combining agriculture, trade and proto-industries. However, the effectiveness of the state action led to rapid centralization of financial power in the government, at the expense of the growth of local institutions. In the late imperial era when the state failed to explore new economic frontiers after most lands had been reclaimed, the local society did not have financial resources and viable institutions to take initiatives in economic development. The lost of "localism" became a key obstacle to China's early modernization. |
