Rebel on the Canal: Disrupted Trade Access and Social Conflict in China, 1650 - 1911
The relationship between trade access and social stability is a classic theme in social sciences studies. The relationship is theoretically ambiguous: better access to trade may increase the opportunity cost for fighting by bringing higher income or discourage the participation in conflict by reducing the prize one could fight for. Empirical evidence comes almost exclusively from global commodity price shocks and the findings are mixed.
My coauthor and I attempt to approach this question by studying the closure of China's Grand Canal, which is the world's largest and oldest artificial waterway. For over 800 years, it facilitated inland navigation and promoted the commercial prosperity of its neighboring markets. Adam Smith, in his work The Wealth of Nations, refers to the canal as affording ``an inland navigation much more extensive than that either of the Nile or the Ganges, or, perhaps, than both of them put together. '' The closure was first launched by the government in 1826, which unintentionally disrupted trade access in areas adjacent to the canal. We show that regions close to the canal became much more rebellious relative to those away of it, which highlights the social instability consequences of trade deprivation.
My coauthor and I attempt to approach this question by studying the closure of China's Grand Canal, which is the world's largest and oldest artificial waterway. For over 800 years, it facilitated inland navigation and promoted the commercial prosperity of its neighboring markets. Adam Smith, in his work The Wealth of Nations, refers to the canal as affording ``an inland navigation much more extensive than that either of the Nile or the Ganges, or, perhaps, than both of them put together. '' The closure was first launched by the government in 1826, which unintentionally disrupted trade access in areas adjacent to the canal. We show that regions close to the canal became much more rebellious relative to those away of it, which highlights the social instability consequences of trade deprivation.
Inspection of Transport on the Lu River (Luhe Duyun Tu), Attributed to Jiang Xuan, (1766). National Museum of China, Beijing.
To identify this effect, we construct an original dataset that covers 575 counties located in six provinces adjacent to the canal over 262 years (1650-1911). We collect all rebellion events documented in Qing Shilu (Veritable Records of Qing Emperors) all rebellion events that took place in this area.
To estimate the causal effect, we adopt a difference-in-differences design by comparing counties along the canal (hereafter ``canal counties'') to those distant from it before and after the 1826 treatment date. On average, canal counties were 117% more rebellious than distant counties after the closure (relative to before).
To estimate the causal effect, we adopt a difference-in-differences design by comparing counties along the canal (hereafter ``canal counties'') to those distant from it before and after the 1826 treatment date. On average, canal counties were 117% more rebellious than distant counties after the closure (relative to before).
We argue that the social instability consequences of the canal's closure was largely due to the loss of trade access. The effects are proportional to the share of market towns within 10km of the canal, and are smaller in places having access to alternative trade routes. Historical accounts also suggest the roles of unemployed urban workers (in particular, sailors and dockworkers) who joined rebel groups and secret societies that fueled a chronic social disorder that afflicted nineteenth-century North China.