ted rulers and their
following. The gentry and the merchants in these small states could not
but realize the advantages of a widened and well-ordered economic field,
and they were therefore entirely in favour of the annexation of their
country so soon as it proved to be tolerable. And the Sung empire could
only endure and gain strength if it had control of the regions along the
Yangtze and around Canton, with their great economic resources. The
process of absorbing the small states in the south continued until 980.
Before it was ended, the Sung tried to extend their influence in the
south beyond the Chinese border, and secured a sort of protectorate over
parts of Annam (973). This sphere of influence was politically
insignificant and not directly of any economic importance; but it
fulfilled for the Sung the same functions which colonial territories
fulfilled for Europeans, serving as a field of operation for the
commercial class, who imported raw materials from it--mainly, it is
true, luxury articles such as special sorts of wood, perfumes, ivory,
and so on--and exported Chinese manufactures. As the power of the empire
grew, this zone of influence extended as far as Indonesia: the process
had begun in the T'ang period. The trade with the south had not the
deleterious effects of the trade with Central Asia. There was no sale of
refined metals, and none of fabrics, as the natives produced their own
textiles which sufficed for their needs. And the export of porcelain
brought no economic injury to China, but the reverse.

This Sung policy was entirely in the interest of the gentry and of the
trading community which was now closely connected with them. Undoubtedly
it strengthened China. The policy of nonintervention in the north was
endurable even when peace with the Kitan had to be bought by the payment
of an annual tribute. From 1004 onwards, 100,000 ounces of silver and
200,000 bales of silk were paid annually to the Kitan, amounting in
value to about 270,000 strings of cash, each of 1,000 coins. The state
budget amounted to some 20,000,000 strings of cash. In 1038 the payments
amounted to 500,000 strings, but the budget was by then much larger. One
is liable to get a false impression when reading of these big payments
if one does not take into account what percentage they formed of the
total revenues of the state. The tribute to the Kitan amounted to less
than 2 per cent of the revenue, while the expenditure on the army