China Through the Looking Glass

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Silver and gold are not the only coin; virtue too passes current all over the world.”

~ Euripides


Born on Salamis Island in 480 BC, Euripides, the classical Greek tragedian, was making full use of the word “virtue,” or arete in Greek, literally translated as “excellence of any kind.” In that, the quote is opened by naming two revered stores of value which precedes the word “virtue,” we can extend the meaning to fulfillment, or the way we modern Westerners gauge commercial integrity, making good on one’s commitments. A bleeding vessel of value, on the other hand, arouses nothing but ire. Such was the case in the early days of the Ming Dynasty, which seized power in 1368 and came to dominate the world economy, commanding nearly a third of global GDP. That factor did little to quell the populace’s discomfit with the government’s imposition of paper currency which was subject to rife counterfeiting and hyperinflation. By 1425, Ming notes were trading at 0.014% of their original value.

Even as the paper money system was abandoned in 1450, the Ming tried to quash the influx of silver, the more precious metal of the era, which was being increasingly demanded as a means of exchange. The supply was initially allayed by the smuggling trade. But the niggling decree by some maritime governments that taxes be paid in silver proved too difficult for the Ming who had no choice but to bow to pressure to open trade. The easiest geographic solution was tricky. Ties with Japan had been largely severed aggravated by pervasive pirating by the island nation. The recently arrived Portuguese generously filled this commercial void, acting as middlemen exporting Chinese silk into Japan in exchange for Japanese-mined silver. It was only a matter of time before trade with Spain began given the rising power’s establishment of a Philippine trading base into which Acapulco silver flowed.

China’s supremacy held through the end of the Ming dynasty which collapsed in 1644. Relations between Ming’s royalty and military leadership had deteriorated against a backdrop of rampant inflation tied to fiscal profligacy, natural disasters and a series of epidemics. A peasant rebellion ensued. By the time the succeeding Qing dynasty fell in 1912, China’s share of the global economy had withered to a third of where it had stood at its peak. In the context of its long history, objective observers would note that China has recovered its competitiveness in record time measured in decades, not centuries.


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Danielle DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence

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