This short but lively book offers a series of insightful observations on market functioning in China during the eighteenth century. The author, Sui-Wai Cheung, who is an Assistant Professor in History at the Chinese University of Hong Kong, completed his doctoral dissertation in 2001 with the title, “The State, Canal Transport, and Market Integration in Eighteenth Century China.” This present book elaborates further on those themes. The author relies on evidence from government edicts, official communications, price reports, and secondary sources written in Chinese, Japanese, and English. In the process, the book provides readers with a useful literature survey of many of the secondary works in this topic and synthesizes how their ideas might fit together. For students unfamiliar with the ideas of Wu Chengming, Han-sheng Chuan and Richard Kraus, Mark Elvin, Philip Huang, and G. William Skinner, and others, who introduced the ideas behind the “sprouts of capitalism,” “self-regulation market,” “macro-regions of China,” “involution,” “high-level equilibrium trap”—and other essential concepts in the vocabulary exchanged among scholars of Chinese Studies in the past several decades—this is a place to start reading.

There are at least three, separate, arguments that divide the organization of the chapters: first, markets around Zhili and Beijing in North China were a segregated from the regions in Central and South China thanks to the glut of rice the government stored near the capital city. Second, trends in eighteenth-century price levels in the Yangzi Delta can be traced to silver fluctuations and bumper harvests, rather than population pressure. Third, in the Yangzi Delta, the government's actions to prevent provincial blockades were probably effective.

Chapters one and two focuses on the government's use of the 1,700 kilometer Grand Canal, which was completed in 1686 and provided a transport route between Beijing and the Yangzi Delta, to transport grain to the capital. The delta was an important market node with transport linkages to other cities further south and to the west of the empire. This grain was called tribute grain, but it was essentially an in-kind tax levied on the provinces. The availability of a surplus ensured that there would be enough rice to supply bureaucrats working in the capital and to help prevent food riots from taking place so close to the capital. The grain was also useful because the government paid wages to the Eight Banner soldiers out of the tribute grain, in the form of grain. The official grain tribute boats were allowed to carry private goods as well—however, as the author shows in this book, the additional space on grain tribute boats were also used on occasion to smuggle salt, which was officially under the control of the imperial salt monopoly.

The grain tribute system aptly illustrates the point that rice markets in North China in Beijing and Zhili province cannot be taken to be representative of what is going on in markets anywhere else in empire. The author shows that the effect of storing large amounts of grain from the tribute nearby the capital, and the use of tribute grain as soldiers’ wages resulted in prices around Beijing being lower than in the Yangzi Delta. The observation that merchants were thought to be surreptitiously shipping tribute grain to Zhili province (even though it was illegal to ship tribute grain out of the capital) helps validate the claim that there was a large supply of grain in Beijing relative to the surrounding areas in the north. The author further contends, however, that the government's transport of grain into Beijing had the effect of “preventing the development of an integrated market” between the Yangzi Delta and Beijing, and “obstructed” or “impeded” the rice trade that would otherwise have developed. Here, and elsewhere, markets are described as being integrated or not, even though market integration is clearly a function of differing degrees rather than absolutes. Moreover, it bears emphasizing that the argument is based on the specific situation in rice. It seems unlikely that the government's rice operations eroded incentives to trade in other, especially non-grain goods.

But the more critical point is that the author seems to be raising a question not so much about whether the government's transport of rice to North China (which was not a fertile rice-growing area) was likely to have closed price gaps and therefore increased integration (yes), but rather whether there is something of inherent value in the nature of private trade that cannot be duplicated in government transport. This is a notion that takes the term integration away from the meaning in the Law of One Price. While the author seems to raise the hint of such interesting notions, these questions are not pursued.

A second key argument, this one from chapter two, is that smuggling on the tribute boats was a substantial cost of the grain tribute, since it undercut the government's revenue from the salt monopoly, and that those costs need to be weighed against the benefits of the grain tribute. That seems to be a valid consideration on its own, but it isn't clear how one can evaluate the cost of smuggling without some sort of estimation of the extent of smuggling, especially when measured against the unknown costs of maintaining the Grand Canal and the tribute boats. Then there are the benefits of the tribute to the government, in for instance, insuring the capital against grain shortages. Perhaps we can only ever arrive at a partial assessment of the full costs and benefits of the tribute system, but even so, at a minimum the formulation of such claims in the conclusion would require some analysis on what ought to be included in the list of presumed costs and benefits.

Chapters three and four are not so much about market integration as price levels in the eighteenth century. One source of rising and falling trends came about because of the monetary system. China was a bimetallic economy at the time, with copper and silver in circulation. Inflation occurred when illegal mints issued copper cash. A second source of inflation came from changing imports of silver from international trade. These consisted of exports of silk to Japan, the revival of the Manila trade, Chinese exports of tea through the Dutch East India Company, and later disruptions to this trade because of British silver shortages arising out of the Napoleonic Wars. Both silver shortages and bumper harvests in the late eighteenth century appeared to have had an impact on price trends in Suzhou.

Chapter five reexamines the question of the role of the government in supporting or hindering market integration. A difficult problem for any assessment of the government's role during the Qing is that what the emperor and high-level officials intended or declared to be the goal of a certain plan of action often turned out to be very different from what the actual impact of that action turned out to be. Sometimes there were faults in the chain of command, and moreover, private agents can behave in unknown ways to negate the effects of government action. For modern researchers, the focus ought to be on an evaluation of outcomes rather than policy initiatives or motivations. In this chapter, the author does consider the actual outcomes, for example, noting that sales of grain from government granaries at reduced prices were a failure because there wasn't much of an actual reduction in prices. In the case of provincial trade blockages, the central government successfully broke down such blockages, as evidenced by, for instance, a number of boats of rice and the volume of grain that were seen to travel across provincial borders. What is not clear here is how frequently this occurred, and whether this was an exception or a general pattern, and what were the variations across time.

This is a book that takes up the challenge of identifying an empirical pattern in the data, confronting that data pattern with existing explanations, and attempting to refute one or the other explanation with historical evidence. The method, in other words, is that of an economic historian. But with only 135 pages of prose covering a wide range of topics, one ends up wishing the author would have written a longer book to increase the weight of that historical evidence—with the systematic presentation of more documentary evidence, and greater depth of detail about institutions of the past. Economists reading this book will probably easily overlook the fact that the analysis of market integration is limited to simple correlation coefficients and price trend plots, but they may wish, as I did, for more history.