In either case the government lost taxes.

Large-scale landowning proved especially injurious in the Sung period,
for two reasons. To begin with, the official salaries, which had always
been small in China, were now totally inadequate, and so the officials
were given a fixed quantity of land, the yield of which was regarded as
an addition to salary. This land was free from part of the taxes. Before
long the officials had secured the liberation of the whole of their land
from the chief taxes. In the second place, the taxation system was
simplified by making the amount of tax proportional to the amount of
land owned. The lowest bracket, however, in this new system of taxation
comprised more land than a poor peasant would actually own, and this was
a heavy blow to the small peasant-owners, who in the past had paid a
proportion of their produce. Most of them had so little land that they
could barely live on its yield. Their liability to taxation was at all
times a very heavy burden to them while the big landowners got off
lightly. Thus this measure, though administratively a saving of
expense, proved unsocial.

All this made itself felt especially in the south with its great estates
of tax-evading landowners. Here the remaining small peasant-owners had
to pay the new taxes or to become tenants of the landowners and lose
their property. The north was still suffering from the war-devastation
of the tenth century. As the landlords were always the first sufferers
from popular uprisings as well as from war, they had disappeared,
leaving their former tenants as free peasants. From this period on, we
have enough data to observe a social "law ": as the capital was the
largest consumer, especially of high-priced products such as vegetables
which could not be transported over long distances, the gentry always
tried to control the land around the capital. Here, we find the highest
concentration of landlords and tenants. Production in this circle
shifted from rice and wheat to mulberry trees for silk, and vegetables
grown under the trees. These urban demands resulted in the growth of an
"industrial" quarter on the outskirts of the capital, in which
especially silk for the upper classes was produced. The next circle also
contained many landlords, but production was more in staple foods such
as wheat and rice which could be transported. Exploitation in this
second circle was not much less than in the first circle, because of
less close