The Emperor’s Tael: Government Commitment Failure and Tax Revolts in Qing China, 1644–1912

Abstract

Scholars have recognized that strengthening the state's fiscal capacity is a prerequisite for long-term economic development. However, a nationwide fiscal centralization reform by the Qing government (1723-1735) failed to achieve this goal. Instead, we find that the centralization reform surprisingly led to more tax revolts. More revolts were observed in areas where the central government reneged on its promise to compensate local governments for reform-related losses in recent years. Moreover, we find no increase in the provision of public goods post-reform. We thus highlight that a fiscal centralization reform can only succeed with credible commitments from the central government.

Keywords: Fiscal Centralization, Tax Revolt, Credible Commitments, Limited Government

JEL Classification: N15; N45; H77