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The Evolution of the Ancient Chinese Financial System through the Lens of Public Risk

Release date:2023-03-02 10:42 Views:1896

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Shi Wei

CAFS Research Report No. 12 (Total No. 2,343)

February 10, 2023


 

Abstract

Faced with a myriad of risks and challenges, early human societies banded together and devised an innovative “concentration-distribution” model to collectively mitigate and manage them. The rise of ancient Chinese states and their finance was the outcome of cross-regional and cross-ethnic collaboration against significant risks and challenges. Hundred schools of thought constructed a diverse range of theories on the origins of national finance from the angle of managing risks. They also deliberated on how to optimize the hedging function of finance from their unique perspectives. With the evolution of risks, the national financial system is being reformed, injecting certainty into the development of human economy and society. It is instrumental in enabling individuals to prevent risks, as well as providing them with protection in the event of an adverse impact. As productive forces advance, individual families have evolved into the most fundamental units of both living and production, gradually taking on the responsibility of managing personal risks, while the state primarily shoulders the responsibility of averting and resolving public risks. History has taught us that finance injects certainty into public risk management and assumes a pivotal role in confronting risks and challenges. Public risk management necessitates the collaborative efforts of central and local governments and the society at large. National finance functions as the primary assumer of public risks, but folk religious groups and clan organizations also serve critical roles in this regard. Public risk management requires a systematic approach that extends beyond emergency. While an appropriate exit strategy within a time limit should be included, it is imperative to maintain economic order, with a particular emphasis on the development of production and the resolution of challenges posed to public wellbeing, aiming to early warn, prevent and resolve potential risks before they escalate into more severe challenges.

 

(Author Affiliation: Chinese Academy of Fiscal Sciences)

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