Why Nations Fail

part of China—should move seventeen miles inland. The
coast was patrolled by troops to enforce the measure, and
until 1693 there was a ban on shipping everywhere on the
coast. This ban was periodically reimposed in the
eighteenth century, effectively stunting the emergence of
Chinese overseas trade. Though some did develop, few
were willing to invest when the emperor could suddenly
change his mind and ban trade, making investments in
ships, equipment, and trading relations worthless or even
worse.
The reasoning of the Ming and Qing states for opposing
international trade is by now familiar: the fear of creative
destruction. The leaders’ primary aim was political stability.
International 
trade 
was potentially destabilizing as
merchants were enriched and emboldened, as they were in
England during the era of Atlantic expansion. This was not
just what the rulers believed during the Ming and Qing
dynasties, but also the attitude of the rulers of the Song

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dynasty, even if they were willing to sponsor technological
innovations and permit greater commercial freedom,
provided that this was under their control. Things got worse
under the Ming and Qing dynasties as the control of the
state on economic activity tightened and overseas trade
was banned. There were certainly markets and trade in
Ming and Qing China, and the government taxed the
domestic economy quite lightly. However, it did little to
support innovation, and it exchanged the development of
mercantile or industrial prosperity for political stability. The
consequence of all this absolutist control of the economy
was predictable: the Chinese economy was stagnant
throughout the nineteenth and early twentieth centuries
while other economies were industrializing. By the time
Mao set up his communist regime in 1949, China had
become one of the poorest countries in the world.