Centers of Progress, Pt. 12: Hangzhou (Paper Money)
Thanks to relative peace, far-ranging trade and cultural openness, Hangzhou prospered and produced many accomplishments, including inventions that we still use today.
Chelsea Follett —
Today marks the twelfth installment in a series of articles by HumanProgress.org called Centers of Progress. Where does progress happen? The story of civilization is in many ways the story of the city. It is the city that has helped to create and define the modern world. This bi-weekly column will give a short overview of urban centers that were the sites of pivotal advances in culture, economics, politics, technology, etc.
Our twelfth Center of Progress is Hangzhou in 12th century China, during the late Song Dynasty’s so-called premodern “economic revolution” or period of proto-industrialization. With its innovations in printing and manufacturing, it has been said that the “Song came closer to initiating an industrial revolution than any other premodern state.” The Song dynasty, which spanned from 969 to 1276 AD, was a time of dynamism and invention. Through trade and industry, the Song empire became the richest on Earth. The dynastic capital, Hangzhou, was the wealthiest and most populous city in the world. Song-era China became the first country to print paper money, which is far easier to carry in large amounts than metal coins. Hangzhou served as a money-printing center and a hub of innovation and creativity.
During the Song era, the average Chinese person experienced extraordinary growth in their income level as the economy expanded. The economy grew due to new technological and agricultural advances and efficient trade routes that produced a genuinely nationwide market. The era also witnessed a significant increase in international exchange, as Chinese merchants expanded their trade networks as far as East Africa. Growing wealth helped motivate the adoption of paper money, as people found themselves dealing with larger transactions than in the past.
Today, Hangzhou is one of China’s top commercial bases. It is also the southern terminus of the Grand Canal, which is the world’s longest artificial river and a UNESCO World Heritage Site. True to its rich history of innovation, Hangzhou continues to serve as a hub of enterprise. Hangzhou houses the headquarters of various Internet industry enterprises such as e-commerce giant Alibaba and is a growing technology center. Hangzhou is the heart of the “Hangzhou metropolitan area,” China’s fourth-largest metropolitan area by population, and is home to some 20 million people. Hangzhou is also a popular tourist destination within China. Hangzhou maintains many well-preserved cultural sites showcasing the city’s history. It even has a large history-based theme park—”Song Dynasty Town” or Songchen—filled with costumed reenactors portraying residents from the city’s golden age.
The Italian explorer Marco Polo famously described Hangzhou as “the most beautiful and magnificent city in the world” and called it the “City of Heaven” during a visit in the 13th century AD. While that was after the Song dynasty ended, much of the architecture and wealth of the city that Marco Polo observed was nonetheless a legacy of that era. (A statue of Marco Polo stands prominently in a lakeside park in the city, admiring Hangzhou’s beauty to this day). A common Chinese saying echoes Marco Polo’s sentiment: “Above, there is Heaven; below, there are Hangzhou and Suzhou”—the latter being another beautiful city just to Hangzhou’s north.
Hangzhou has been an important city since the 7th century AD when its Grand Canal was first built to connect the urban center to Beijing. Today, the canal remains the main north-south waterway in China. But the city’s golden age began when the Song dynasty made it their capital. The Song era saw the rapid adoption of woodblock printing, a technology that supercharged intellectual life in the Song dynasty. Hangzhou ranked first in China when it came to both volume and quality of woodblock printing. The technique, which consisted of carving text and pictures into wooden blocks, covering them with ink, and pressing the blocks against paper, provided a way to mass-produce books, documents, and banknotes.
Woodblock printing developed in Buddhist monasteries to reproduce spiritual texts, with examples dating as far back as 200 AD, and the method was well-established by the 9th century AD. However, it was the Song era that first widely adopted woodblock printing for non-religious purposes. In the 11th century AD, the artisan and inventor Bi Sheng (990–1051 AD) devised movable type. The adoption of printing technology dramatically lowered the cost of books and encouraged the spread of literacy. Not only did widespread printing lead to a veritable tidal wave of artistic output such as poetry and dramatic texts, but it also sped up scientific progress—for example, by aiding the dissemination and advancement of pharmacological and medical knowledge.
If you could visit Hangzhou during its golden age, you would enter a gorgeous metropolis bursting with art, commerce, innovation, and a spirit of openness. The crowds would have been formidable; by the end of the Song era in 1276 AD, Hangzhou was home to around 1.75 million residents according to some estimates. That is slightly more than the current population of Phoenix, Arizona, but it represented an unprecedented urban concentration of people. While poor by modern standards, the city’s people were then the richest on Earth. Looking out onto the harbor, you would have seen large multi-sectioned ships with up to four decks and a dozen sails at a time when Europeans still traveled in tiny galleys powered chiefly by the muscle of rowers.
Thanks to advances in dyeing and weaving and textile industry developments, the city’s people would have worn a wide variety of beautiful and luxurious robes. You would not have seen many high-ranking women walking around. Despite the era’s many advances, it was also the beginning of “foot-binding” among China’s elite. That cruel practice consisted of repeatedly breaking the bones in women’s feet, starting in early childhood, to contort feet into an unnatural shape that was considered beautiful but made walking physically painful.
In the marketplace, you would see a food culture emerging that has since come to define Chinese cuisine. During the earlier Tang dynasty (the golden age of our tenth Center of Progress, Chang’an), China’s dominant grains were wheat and millet, and the most common drink was wine. During the Song dynasty, rice and tea became the country’s staple food and beverage and have remained so to this day.
You would have been mesmerized by the city’s elaborate architecture. (China’s traditional upturned roofs originated in the Song dynasty). Hangzhou’s striking temples, many of which still stand today, were a testament to the era’s philosophical and spiritual diversity. As writer Eric Weiner put it, “The blending of Buddhist and Confucian thought yielded a remarkably tolerant atmosphere.” Different thought-systems coexisted and thrived. Conversation rose to an art form, and as the city became wealthier, art of all kinds became an important part of everyday life. While in previous eras, poetry was limited to religious subjects, in the Song era, poetry expanded to deal with every topic imaginable, and poetry competitions were frequent.
Hangzhou was the site of great creativity. In the 11th century AD, the polymath Shen Kuo (1031–1095 AD) invented the magnetic compass. He also drew the world’s first topographical map and was the first person to record the process of sedimentation. Shen’s surviving notebooks have garnered comparisons to Leonardo da Vinci’s for their breadth. Shen’s work spanned topics such as mathematics, astronomy, meteorology, geology, zoology, botany, pharmacology, agronomy, archeology, ethnography, cartography, diplomacy, hydraulic engineering, and finance. Shen was also a prolific poet.
Another intellectual of the Song era was Su Tung-Po (1037–1101 AD). He was once a governor of Hangzhou but is better known for his art, work as an engineer, and insightful poetry. Tung-Po’s poetry reveals a self-effacingly unflattering view of government officials:
Families when a child is born Hope it will turn out intelligent. I … [o]nly hope that the baby will prove Ignorant and stupid. Then he’ll be happy all his days And grow into a cabinet minister.
Given that many of the city’s advances came from the private sector, Tung-Po’s attitude was understandable. Even paper money was arguably a private sector invention. As early as the Tang dynasty (618–907 CE), the impracticality of transporting strings of heavy coins inspired Silk Road merchants to use paper promissory notes instead to make purchases. (Chinese coins had square holes in the middle to allow for stringing). Private agents originally produced those notes. At the beginning of the Song dynasty, the government recognized the value of that innovation and licensed deposit shops where people could exchange coins for such promissory notes, thus somewhat standardizing the system. Then, in the 12th century, the government gave still greater recognition to the concept of paper money by issuing the first official paper currency, called Jiaozi. Those banknotes often featured intricate illustrations of commerce.
During the golden age of Hangzhou’s “economic revolution,” the Song leaders managed to largely avoid international conflict by defusing tensions with trade agreements and tributary offers. Thus, Hangzhou was mostly at peace during its peak years, leaving its residents free to engage in enterprises that further enriched the city. “Between … 960 and … 1127 [AD], China passed through a phase of economic growth that was unprecedented in earlier Chinese history, perhaps in world history up to this time. It depended on a combination of commercialization, urbanization, and industrialization that has led some authorities to compare this period in Chinese history with the development of early modern Europe six centuries later,” according to the American historian Philip D. Curtin.
Factories situated in Hangzhou and the other major Song-era cities of Chengdu, Huizhou, and Anqi printed paper money with a uniform design using woodblocks and six different ink colors. Each city used multiple banknote seal stamps and different fiber mixes in the paper currency they produced to make counterfeiting difficult. In 1175 AD, as many as a thousand employees may have worked in Hangzhou’s paper money factory each day. The earliest money notes expired after just three years, and their use was limited to certain regions of the Song empire. Then, in 1265 AD, Hangzhou’s factories printed the first truly national currency. That currency exhibited a unified design, was accepted across the empire, and its value was backed by silver or gold. The paper money notes were available in various denominations. Unfortunately, that national currency was only used for nine years before a Mongol invasion ended the Song dynasty.
The concept of paper currency proved more lasting than the Song dynasty that created it. The subsequent Mongol Yuan dynasty issued their own paper currency, known as the Chao. However, the Mongols did not tie their currency’s value to anything and printed more and more banknotes until runaway inflation degraded the currency’s worth. Paper money can be susceptible to hyperinflation without sound monetary policy. Paper currency has nonetheless proved to be a lasting and practical invention that is now used worldwide.
For being a hothouse of invention and creativity and the site of an early economic revolution that gave the world paper money, 12th century Hangzhou is deservedly our twelfth Center of Progress. Bolstered by printing technology and paper currency’s efficiency, the Song era saw a steady stream of technological breakthroughs. Those included the compass, the first mechanical clocks, and the invention of forensic science. The economic and technological advancements of the Song era translated into improving living conditions for the average person. By practically every measure of human wellbeing, ranging from sanitation to literacy to average income, China was superior to Europe in the twelfth century. Thanks to relative peace, far-ranging trade, and cultural openness, Hangzhou prospered and produced many accomplishments, including inventions that we still use today.
AI Is a Great Equalizer That Will Change the World
A positive revolution from AI is already unfolding in the global East and South.
Zion Lights —
Summary: Concerns over potential negative impacts of AI have dominated headlines, particularly regarding its threat to employment. However, a closer examination reveals AI’s immense potential to revolutionize equal and high quality access to necessities such as education and healthcare, particularly in regions with limited access to resources. From India’s agricultural advancements to Kenya’s educational support, AI initiatives are already transforming lives and addressing societal needs.
The latest technology panic is over artificial intelligence (AI). The media is focused on the negatives of AI, making many assumptions about how AI will doom us all. One concern is that AI tools will replace workers and cause mass unemployment. This is likely overblown—although some jobs will be lost to AI, if history is any guide, new jobs will be created. Furthermore, AI’s ability to replace skilled labor is also one of its greatest potential benefits.
Think of all the regions of the world where children lack access to education, where schoolteachers are scarce and opportunities for adult learning are scant.
Think of the preventable diseases that are untreated due to a lack of information, the dearth of health care providers, and how many lives could be improved and saved by overcoming these challenges.
In many ways, AI will be a revolutionary equalizer for poorer countries where education and health care have historically faced many challenges. In fact, a positive revolution from AI is already unfolding in the global East and South.
Improving Equality through Education and Health Care
In India, agricultural technology startup Saagu Baagu is already improving lives. This initiative allows farmers to increase crop yield through AI-based solutions. A chatbot provides farmers with the information they need to farm more effectively (e.g., through mapping the maturity stages of their crops and testing soil so that AI can make recommendations on which fertilizers to use depending on the type of soil). Saagu Baagu has been successful in the trial region and is now being expanded. This AI initiative is likely to revolutionize agriculture globally.
Combining large language models with speech-recognition software is helping Indian farmers in other ways. For example, Indian global impact initiative Karya is working on helping rural Indians, who speak many different languages, to overcome language barriers. Karya is collecting data on tuberculosis, which is a mostly curable and preventable disease that kills roughly 200,000 Indians every year. By collecting voice recordings of 10 different dialects of Kannada, an AI speech model is being trained to communicate with local people. Tuberculosis carries much stigma in India, so people are often reluctant to ask for help. AI will allow Indians to reduce the spread of the disease and give them access to reliable information.
In Kenya, where students are leading in AI use, the technology is aiding the spread of information by allowing pupils to ask a chatbot questions about their homework.
Throughout the world, there are many challenges pertaining to health care, including increasing costs and staff shortages. As developed economies now have rapidly growing elderly populations and shrinking workforces, the problem is set to worsen. In Japan, AI is helping with the aging population issue, where a shortage of care workers is remedied by using robots to patrol care homes to monitor patients and alert care workers when something is wrong. These bots use AI to detect abnormalities, assist in infection countermeasures by disinfecting commonly touched places, provide conversation, and carry people from wheelchairs to beds and bathing areas, which means less physical exertion and fewer injuries for staff members.
In Brazil, researchers used AI models capable of predicting HER2 subtype breast cancer in imaging scans of 311 women and the patients’ response to treatment. In addition, AI can also help make health resource allocations more efficient and support tasks such as preparing for public health crises, such as pandemics. At the individual level, the use of this technology in wearables, such as smartwatches, can encourage patient adherence to treatments, help prevent illnesses, and collect data more frequently.
Biometric data gathered from wearable devices could also be a game-changer. This technology can detect cancers early, monitor infectious diseases and general health issues, and give patients more agency over their health where access to health care is limited or expensive.
Education and health care in the West could also benefit from AI. In the United States, text synthesis machines could help to address the lack of teachers in K–12 education and the inaccessibility of health care for low-income people.
Predicting the Future
AI is already playing a role in helping humanity tackle natural disasters (e.g., by predicting how many earthquake aftershocks will strike and their strength). These models, which have been trained on large data sets of seismic events, have been found to estimate the number of aftershocks better than conventional (non-AI) models do.
Forecasting models can also help to predict other natural disasters like severe storms, floods, hurricanes, and wildfires. Machine learning uses algorithms to reduce the time required to make forecasts and increase model accuracy, which again is superior to the non-AI models that are used for this purpose. These improvements could have a massive impact on people in poor countries, who currently lack access to reliable forecasts and tend to be employed in agriculture, which is highly dependent on the weather.
A Case for Optimism
Much of the fear regarding AI in the West concerns the rapid speed at which it is being implemented, but for many countries, this speed is a boon.
Take the mobile phone. In 2000, only 4 percent of people in developing countries had access to mobile phones. By 2015, 94 percent of the population had such access, including in sub-Saharan Africa.
The benefits were enormous, as billions gained access to online banking, educational opportunities, and more reliable communication. One study found that almost 1 in 10 Kenyan families living in extreme poverty were able to lift their incomes above the poverty line by using the banking app M-Pesa. In rural Peru, household consumption rose by 11 percent with access to phones, while extreme poverty fell 5.4 percent. Some 24 percent of people in developing countries now use the mobile internet for educational purposes, compared with only 12 percent in the richest countries. In lower-income countries, access to mobile phones and apps is life-changing.
AI, which only requires access to a mobile phone to use, is likely to spread even faster in the countries that need the technology the most.
This is what we should be talking about: not a technology panic but a technology revolution for greater equality in well-being.
Women’s Financial Inclusion Boosted in Sub-Saharan Africa
“In the 10 years leading up to 2021, the share of women in sub-Saharan Africa who owned a financial account more than doubled to reach 49%, according to data from the Global Findex.
Since 2017 alone, account ownership rates for women in the region increased 12 percentage points, driven entirely by increased adoption of mobile money accounts.”
Bitcoin Brought Electricity to Countries in the Global South
It won’t be the United Nations or rich philanthropists that electrifies Africa.
Joakim Book —
Summary: Energy is indispensable for societal progress and well-being, yet many regions, particularly in the Global South, lack reliable electricity access. Traditional approaches to electrification, often reliant on charity or government aid, have struggled to address these issues effectively. However, a unique solution is emerging through bitcoin mining, where miners leverage excess energy to power their operations. This approach bypasses traditional barriers to energy access, offering a decentralized and financially sustainable solution.
Energy is life. For the world and its inhabitants to live better lives—freer, richer, safer, nicer, and more comfortable lives—the world needs more energy, not less. There are no rich, low-energy countries and no poor, high-energy countries.
“Energy is the only universal currency; it is necessary for getting anything done,” in Canadian-Czech energy theorist Vaclav Smil’s iconic words.
Electricity matters because it is the ultimate poverty killer. No matter where you look, as electricity use has increased, so has economic growth. Having electricity does not guarantee wealth. But its absence almost always means poverty. Indeed, electricity and economic growth go hand in hand.
To supply electricity on demand to many of those people, especially in the Global South, grids need to be built in the first place and then have enough extra capacity to ramp up production when needed. That requires overbuilding, which is expensive and wasteful, and the many consumers of the Global South are poor.
Adding to the trouble are the abysmal formal institutions of property rights and rule of law in many African countries, and the layout of the land becomes familiar: corruption and fickle property rights make foreign, long-term investments basically impossible; poor populations mean that local purchasing power is low and usually not worth the investment risk.
What’s left are slow-moving charity and bureaucratic government development aid, both of which suffer from terrible incentives, lack of ownership, and running into their own sort of self-serving corruption.
In “Stranded,” a long-read for Bitcoin Magazine, Human Rights Foundation’s Alex Gladstein accounted for his journey into the mushrooming electricity grids of sub-Saharan Africa: “Africa remains largely unable to harness these natural resources for its economic growth. A river might run through it, but human development in the region has been painfully reliant on charity or expensive foreign borrowing.”
Stable supply of electricity requires overbuilding; overbuilding requires stable property rights and rich enough consumers over which to spread out the costs and financially recoup the investment over time. Such conditions are rare. Thus, the electricity-generating capacity won’t be built in the first place, and most of Africa becomes dark when the sun sets.
Gladstein reports that a small hydro plant in the foothills of Mount Mulanje in Malawi, even though it was built and financed by the Scottish government, still supplies exorbitantly expensive electricity—around 90 cents per kilowatt hour—with most of its electricity-generating capacity going to waste.
What if there were an electricity user, a consumer-of-last-resort, that could scoop up any excess electricity and disengage at a moment’s notice if the population needed that power for lights and heating and cooking? A consumer that could co-locate with the power plants and thus avoid having to build out miles of transmission lines.
With that kind of support consumer—guaranteeing revenue by swallowing any excess generation, even before any local homes have been connected—the financial viability of the power plants could make the construction actually happen. It pays for itself right off the bat, regardless of transmissions or the disposable income of nearby consumers.
If so, we could bootstrap an electricity grid in the poorest areas of the world where neither capitalism nor central planning, neither charity worker nor industrialist, has managed to go. That consumer of last resort could accelerate electrification of the world’s poorest and monetize their energy resilience. That’s what Gladstein went to Africa to investigate the bourgeoning industry of bitcoin miners electrifying the continent.
Bitcoin Saves the World: Energy-Poverty Edition
Africa is used to large enterprises digging for minerals. The bitcoin miners springing forth all over the continent are different. They don’t need to move massive amounts of land and soil and don’t pollute nearby rivers. They operate by running machines that guess large numbers, which is the cryptographic method that secures bitcoin and confirms its transaction blocks. All they need to operate is electricity and an internet connection.
By co-locating and building with electricity generation, bitcoin miners remove some major obstacles to bringing power to the world’s poorest billion. In the rural area of Malawi that Gladstein visited, there was nowhere to offload the expensive hydro power and no financing to connect more households or build transmission lines to faraway urban areas: “The excess electricity couldn’t be sold, so the power stations built machines that existed solely to suck up the unused power.”
Bitcoin miners are in a globally competitive race to unlock patches of unused energy everywhere, so in came Gridless, an off-grid bitcoin miner with facilities in Kenya and Malawi. Any excess power generation in these regions is now comfortably eaten up by the company’s onsite mining machines—the utility company receiving its profit share straight in a bitcoin wallet of its own control, no banks or governments blocking or delaying international payments, and no surprise government currency devaluations undercutting its purchasing power.
No aid, no government, no charity; just profit-seeking bitcoiners trying to soak up underused energy. Gladstein observes:
One night during my visit to Bondo, Carl asked me to pause as the sunset was fading, to look at the hills around us: the lights were all turning on, all across the foothills of Mt. Mulanje. It was a powerful sight to see, and staggering to think that Bitcoin is helping to make it happen as it converts wasted energy into human progress. . . .
Bitcoin is often framed by critics as a waste of energy. But in Bondo, like in so many other places around the world, it becomes blazingly clear that if you aren’t mining Bitcoin, you are wasting energy. What was once a pitfall is now an opportunity.
For decades, our central-planning mindset had us “help” the Global South by directing resources there—building things we thought Africans needed, sending money to (mostly) corrupt leaders in the hopes that schools be built or economic growth be kick-started. We squandered billions in goodhearted nongovernmental organization projects.
Even for an astute and serious energy commentator as Bryce, not once in his 40-page report on how to electrify the Global South did it occur to him that bitcoin miners—the very people who are turning the lights on for the poorest in the world—could play a crucial role in achieving that.
It’s so counterintuitive and yet, once you see it, so obvious. In the end, says Gladstein, it won’t be the United Nations or rich philanthropists that electrifies Africa “but an open-source software network, with no known inventor, and controlled by no company or government.”
Digital Transformation Drives Development in Africa
“However, in the last decade, the region has made substantial strides toward digital transformation, with hundreds of millions of people gaining access to the internet and productively utilizing a wide variety of digital services, such as mobile payments and online learning platforms.”
