Diversification key to provinces' success

Geographically, China is large. But historically and economically, it used to be small. Ever since the 1100s, the country has been heavily dependent on business activity in one or several small areas for maintaining an imperial government.

An example of this is the grain stocks the central government needs to feed its officials, the army and distribute in areas that have been affected by natural disasters. People often used to say, without much exaggeration, that once Hunan and Hubei (two rice-producing provinces on the middle reaches of the Yangtze River) had reported a good harvest, supply was guaranteed to all under heaven.

Such fragile conditions prevailed through the Mao Zedong era, when Shanghai contributed a huge portion of the country's government revenue and foreign-exchange earnings. In private, officials called the city China's East Germany, which used to be the most productive part of the Eastern bloc.