By contrast, during the same period the revenue of percentage of national income in China were even lower than in Britain. According to Feuerwerker (1995) the typical figure was 5-7% in Qing dynasty. It seems that the taxation policy was more rational in China. However, this was somewhat misleading for two reasons. Firstly, differing from Britain, there was no incentive for people to work in innovative sectors that was created by different burden of taxation. Secondly, there was a huge gap between the amount of central government revenue and the real amount of taxes that imposed from people. This is because central government only required a amount of taxes that those local governments had to hand in each year, so that it provided a possibility for local administrational institutions to imposed far more taxes than the amount required by central government from the citizens using force and threaten, and kept the surplus themselves. In conformity with Fairbank’s (1980) description: the corruption was omnipresent. Although this kind of behaviors was illegal, still a huge number of bureaucrats would like to take a risk because the territory in China was extremely wide and the inspective system was not efficient. However, in China, people who suffered the high tax pressure that exerted by local government could not export their goods like British due to different trade regulations which will be discussed in next section.
To sum up, the tax system in Britain was not perfect because it was high in order to satisfy some unnecessary military expenditure. However, it urged the changing process by encouraging people to find jobs in innovative sectors and forced them to export without intending. By contrast, although the central revenue as a percentage of national income in China was low, there was no incentive in innovation and people was exploited by local government and could not export, they could only continue the old pattern. Thus, the Chinese state actually hampered the economic change by taxation whereas British facilitated the change.
3. Commercial regulation and change
The Hanoverian government’s action in terms of commerce was quite successful; they made great efforts in boosting business development. Cottrell (1980) mentioned that partnership was allowed in starting or expanding business, and firms were allowed to “raise capital through the sale of stocks and shares.” By these direct regulating methods, running a business became easier to start and expand than ever before. Apart from these, some indirect regulations has also been taken. Lambert (1971) claimed that the state had assisted in the developing tremendously by “repealing restrictive statutes or by encouraging the courts to neglect the enforcement of those areas of the common law which had hindered private exchanges and initiatives.” Furthermore, Stearns (1975) indicated that those “local tolls and other barriers” were cut down. “Road and canals were extended.” Thus, the liberalization for business and transportation were all made more suitable for developing commerce. As for foreign trade, according to Engerman (1993) the navigation act restricted import, but export was mostly unimpeded except “prohibition of certain colonial exports (including fur and finished iron products).
The circumstance in China was quite different. The government in Qing dynasty had a similar attitude to British government in improving transportation. Fairbank (1980) claimed that they spent huge expenditure for railway construction. Most other regulations of commerce were opposite from Britain’s. For instance, in handcraft workshops, a large number of labours gathering together were not allowed, and copper ores in a county were not allowed to be extracted by people in other counties because copper ores was a nice place for uprisings. These regulations were definitely not beneficial for the development of commerce and economy. Actually, the rulers in Qing dynasty could not be unaware of these problems. However, in their views, comparing with economic growth the safety and stable of their political power was more crucial, and those gathering behaviors were tend to arouse innovations and uprisings. Accordingly, neither theoretical and technical innovation nor industrial revolution can occur in China under the control of Qing government. As for foreign trade, because “most commodities were handled by state-controlled monopolies” (Feuerwerker 1995) and due to ‘the ban on maritime trade’, both export and import were extremely difficult for businessmen.
In conclusion, British state made huge effort to boost commerce whereas Chinese state paid more attention to secure their political power so that commerce boomed in the former one but lack of advance in the later one.
4. Roles in structural change
The shift from agriculture to industry is on the premise of growth of productivity, because if labours enter the secondary forms of production, the sum of productivity of the decreasing number of labours in agriculture will not be able to meet the food demand for overall population. Accordingly, in order to achieve this shift, the British state made many efforts in promoting the productivity. Jones (1988) claimed that the well-defined property right provided by government and institutions produced proper “incentives and resources allocations”. McCloskey (1975) mentioned that the improvement of productivity was also directly urged by Parliamentary Acts “via institutional innovation.” As a consequence, by those measures “the productivity growth in agriculture [in Britain] was faster than elsewhere in the economy (Wrigley 1985).” Moreover, the state invested and encouraged the use of new technical machine, which increased the output of both agriculture and industry dramatically (Feuerwerker 1995).
By contrast, the percentage of employment in agriculture and industry was almost remained constant with approximately 80% of agricultural employment according to Feuerwerker (1995). This is because the opposite role that Chinese government played from Britain’s. On one hand, because of “the traditional ideology posture of exalting agriculture” (Fairbank 1980), the state did not really passionate about encouraging the structural change. On the other hand, Feuerwerker (1995) argued that differing from British state “Chinese state had contributed little to the elaboration of the legal, financial, and commercial institutions that could facilitate the shift of commercial capital into industrial investment” including machines used for agriculture (p37). Thus, without technical helps, productivity still remained a low level. Therefore, a large number of labours in agriculture were still needed to supply food for the overall population.
To conclude, British state played an active role in structural change by providing well-defined property right for labours, publishing wise acts and supporting the use of machines, while Chinese state contributed little because of under the restriction of traditional ideology and lack of machinery supports.
5. Conclusion
In general, this essay compared and contrasted the role of British and Chinese state in economic change between 1760 and 1914 mainly focusing on taxes policies, commercial regulation, and effect of states in structural change. British state mostly accelerated and facilitated the process of economic change by low taxes in innovative sectors and encouraged international trade by high taxation, although without intention; informed direct and indirect commercial regulation as well as opening trade; wise acts and actions in structural change. Whereas, Chinese state mostly hindered the transform of economy by no incentive for innovative sectors provided by taxation and corruptions in local government; restricting commercial gatherings as well as barrier to trade; little effect in structural change. As a result, British economy developed rapidly in the period and became the center of the world while China still kept the pre-modern mode, weak in economy and power. Accordingly, it was invaded and experienced great social and political upheaval in 20th century.
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