For thousands of years, China was an agricultural society where arable land, population, and their distribution was the key to social hierarchy. Much like medieval Europe, the vast majority of economic activity was subsistence agriculture, but unlike medieval Europe, since the Song dynasty period a relatively high degree of commercialization started to develop and large cities became very widespread compared to western Europe. For most of recorded human history, in fact, China was by far the most populous and prosperous state on Earth. The trade networks that developed around these centers created an economic system where several economic regions formed, mostly self-contained and interacting little with each other.
That the empire never formally fragmented into these lines is one of history's greatest dilemmas, one that will probably never be answered fully (and I certainly will not try to).
This is the Macro-Regional Model, which best explains the internal economic dynamics of China before the arrival of western European traders and capitalism with them, an event which disrupted a society that was finally recovering from the massive blow it suffered in the crisis of the fall of the Ming. This video is an introduction to the economy of the north China area (north of the Yangtze) in the highest period of the Qing dynasty, during the reigns of Kangxi, Yongzheng, and Qianlong, and the dynamics described remain mostly the same until the "opening of China" by the European powers.
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