This weekend, I invited a PhD student from the history department of Zhongda University to have tea, and we happened to discuss the recent strict tax audits by the state. Looking at it from a historical perspective was quite interesting, and I happily elaborated!

He said that when you read and study history extensively, you will discover something very strange: history is like a pendulum, constantly moving, with the surface changing but the core never really altering.

Before a building collapses, no one ever sounds an alarm. But if you are calm enough, you will find that history always habitually gives you three signals in advance, precisely appearing on the eve of every turning point, neither too early nor too late.

The first signal: property rights begin to become unstable. What you thought was yours is no longer certain to be yours tomorrow.

The second signal: tax policies begin to "carry emotion." No longer are they confined by rigid budget logic, but instead are reactive, punitive, and even liquidation-based.

The third signal: the liquidity of funds is tightly restricted. Money prefers to rot underground, hide in layers, or vanish across borders rather than circulate in the market.

If only a single signal emerges, you can grit your teeth and endure. But once this "three-in-one" combination comes together, history's reckoning enters the final settlement process, and at this time, one must be especially cautious.

Then, following this line of thought, we began to discuss history together, using history as a mirror to see if this logic holds.

The first account: The fall of an empire during the Chongzhen era of the Ming Dynasty

Many people lay the blame for the fall of the Ming Dynasty at Li Zicheng's feet, but if you really break it down, Li Zicheng was merely the last straw that broke the camel’s back. That camel had already been stripped of its bones piece by piece by the Chongzhen court.

The collapse of property rights began with the imposition of the "Three Taxations."

In the first year of Chongzhen (1628), in order to deal with the Backward Jin from the northeast and the domestic rebel armies, the court began levying the "Liaojing" tax, which was later compounded by the "Suppression Tax" and the "Training Tax." Combined, these three imposed over 20 million taels of silver from the people each year.

This amount in a normal year in an agricultural empire, where national tax revenue was only about four to five million taels, is quite a concept—equivalent to the empire leeching the populace dry.

Even worse than the tax amount was the method of collection. The court set quotas for local officials, and failure to meet these could result in losing their hats or even execution. Local officials, facing this knife, had no choice but to pass the pressure onto the gentry landlords: "You have more land, you contribute." Thus, throughout the Chongzhen years, the gentry class suddenly discovered a terrifying logical reversal: the wealthier they were, the more they became targets of the court and the more dangerous they became.

Once this logic took hold, the last shred of loyalty from the elite class towards the empire began to evaporate.

Taxation with emotion transitioned from "demand-based extortion" to "targeted liquidation."

Normal fiscal revenue has its inherent logic: based on land area, on trade flows, on fixed proportions, allowing for predictability and planning. However, during the Chongzhen period, taxes had completely lost their "contractual" attribute, turning into a reflexive mechanism where wherever a crisis appeared, that's where they would fleece the populace.

Even more absurdly, submitting taxes did not bring safety. After receiving the money, the court would deduce: "You can pay this much, indicating you still have a good base; in two months, we’ll come again." This created an extremely damaging "honesty tax," where the more compliant you were, the more exposed you became, and the more exposed, the more dangerous.

By 1644, when Li Zicheng attacked Beijing, he directly conducted "recovery and taxation" against the officials and gentry of the capital. Torture and mass executions occurred, with extorted silver reportedly reaching as much as seventy million taels. This was no longer taxation; it was a large-scale property plunder carried out by a rebel army, backed by public power.

Liquidity locked up as wealthy merchants began hiding money.

During the Chongzhen period, the phenomenon of extensive silver storage appeared with a distinctive era feature: large-scale hoarding of silver. Gentry and merchants would rather bury their gold and silver underground, sealing it off, letting it "disappear," rather than allow it to exist in any visible form.

The underlying logic of this behavior is obvious: once silver circulates, it leaves traces in the accounts; leaving traces means you are wealthy, and being wealthy implies you become the next target.

Thus, currency ceased to circulate, commercial activities shrank, and the livelihoods of artisans and merchants were cut off, with millions of unemployed lower-class individuals flowing into the ranks of the rebel army. The consequences of liquidity blockage are never just economic issues; they ultimately become military issues.

With all three signals out, in 1644, during the Year of Jia Shen, the city of Beijing fell, and a dynasty that had operated for 276 years completed its ending process in just three months. If you have read "These Things About the Ming Dynasty," you might feel even more lamented!

The second account: Late Qing, citizens became second-class citizens

If the end of the Ming dynasty was a case of an empire placing a knife against its own people's necks, then the end of the Qing dynasty is even more absurd, evolving into a spectacle where foreigners’ properties were safer than those of its own citizens.

The duality of property rights began after the defeat in the First Sino-Japanese War.

In 1895, the Treaty of Shimonoseki was signed, burdening the Qing government with 230 million taels of silver in war reparations, equivalent to three years’ total national revenue at the time. The court was out of money and could only borrow from foreign powers, such as HSBC, Deutsch-Asiatische Bank, and the Russo-French Banking Consortium... borrowing one sum while mortgaging some customs duties or mining rights; then borrowing again, and mortgaging again.

Simultaneously, provincial governors were authorized to "raise funds locally," effectively granting them virtually unrestrained local requisition rights. Thus, all that could be requisitioned was taken away; even that which was not allowed, attempts were made to take it as well.

But the most ironic occurrence was that foreign businesses and compradors, backed by the consular jurisdiction of unequal treaties, were not easily disturbed by the Qing government. Instead, it was the unprotected native gentry and merchants who became the easiest targets to fleece.

When the risks of being a "native citizen" far outweighed those of being "under a foreign name," the elite class began desperately placing their assets under the protection of foreign firms, British companies, and foreign churches. This wasn’t admiration of the West; it was rational self-preservation. This might be one of the earliest documented cases of systematic "asset flight" in Chinese history.

Taxes became a debt repayment machine, beginning with a massive squeeze from the Boxer Indemnity.

In 1901, the Boxer Indemnity was finalized: 450 million taels of silver, adjusted for Western populations translates to "every Chinese person pays one tael," to be repaid over 39 years, at an interest rate of 0.4%, with the total principal and interest amounting to 982 million taels.

The Qing court desperately expanded tax categories, pushing the "li" system to extremes, charging tolls for goods transported domestically, resulting in layers of deductions at each checkpoint; sometimes, a journey from Shanghai to Hankou would see seven or eight extractions. Historians estimate that friction losses from tolls in late Qing commodity circulation accounted for 30% to 50% of total costs.

These taxes were not used to repair roads, build schools, or strengthen the army; they were simply a bloodsucking machine, draining the wealth accumulated by the populace through layers of bureaucratic systems, ultimately flowing into the pockets of foreign powers. Taxation completely lost its rightful "public contract" nature and turned into naked transfer payments, transferring wealth from Chinese citizens to Western creditor countries.

Capital flight followed the two routes of the foreign concessions and the South Seas.

Faced with domestic asset insecurity, the wealthy of late Qing chose conspicuously similarly: to move money to safe places.

Bank deposits in the Shanghai concession skyrocketed after the Boxer Incident. Chinese deposits in the Hong Kong and Shanghai Banking Corporation multiplied several times between 1900 and 1910. The overseas Chinese commercial network in the South Seas formed a vast underground remittance channel, with capital quietly circulating outside the boundaries of sovereignty. It is estimated that during the ten years around 1900, the private capital flowing from China to Hong Kong and the South Seas conservatively exceeded hundreds of millions of taels of silver.

The more profound consequence was that when commercial elites and local gentry completely lost trust in the court, the financing channels of the revolutionary party became unobstructed in overseas Chinese communities. A large part of Sun Yat-sen's revolutionary funds came from secret donations from overseas Chinese in the South Seas; that money, which could have circulated domestically, was pushed into the revolutionary side by the tax and property logic of the Qing court itself.

All three signals were again brought together, in 1911, a gunshot rang out in Wuchang, and the final reckoning of the Qing dynasty took less than four months.

The gears of history never break suddenly.

Two downfalls, 267 years apart, yet the scripts are strikingly similar:

Neither collapsed suddenly on a particular day. Both first blurred property rights, making property owners uneasy; then turned taxation into an emotional punishment, making the compliant feel danger; finally completely froze liquidity, causing the entire economic engine of society to slowly stall.

The three signals slowly accumulated, and one day, they all simultaneously reached a critical point.

Before that node, everyone would say "it’s still okay, we’re not there yet." After that node, everyone would say "I knew it would come to this long ago."

Those who truly understand history know: the silence in between is the most valuable information.

When an era begins to make people afraid to hold, afraid to circulate, and afraid to believe in tomorrow, those who are wise enough have already quietly started their preparations.

History never tells you. But it continually sends you signals. Whether you see them or not is another matter. The above exchange is for discussion only!

In the end, a friend reminded me to prepare early for overseas identity and assets!🧐

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