How Kublai Khan Encouraged Trade in the Mongol Empire

Posted by Bill Mattocks on Tuesday, November 28, 2023

The Mongol Empire expanded rapidly under the leadership of Genghis Khan in the early 13th century. His grandson, Kublai Khan, continued this expansion after becoming Great Khan in 1260. By 1279, Kublai had conquered all of China and established the Yuan Dynasty. As ruler of this vast empire, Kublai Khan implemented policies and initiatives to encourage trade and economic growth.

Kublai Khan portrait Portrait of Kublai Khan, Emperor of the Yuan Dynasty. Source: Wikimedia Commons

Improving Infrastructure

One key way Kublai Khan encouraged trade was by investing in and improving infrastructure throughout his empire. According to Rossabi:

“The Mongols built roads and way stations, dug canals, repaired bridges, and maintained postal relay stations every twenty-five to thirty miles along the major routes. They attempted to eradicate brigandage and piracy that hindered commerce.” (Rossabi 9)

This infrastructure made trade easier by connecting cities and providing safe, reliable routes for merchants to transport goods across land and water.

For example, Kublai ordered the repair and reopening of the Grand Canal. This major waterway connected the Yangtze and Yellow Rivers in northern and southern China, allowing efficient transportation of taxes - often paid in the form of grain - and commercial goods like rice and tea to the capital.

Grand Canal in China

The Grand Canal connecting waterways in Northern and Southern China.

His wife Chabi also promoted extending the Yam road system which connected cities and scattered Mongol encampments across Central Asia and China, facilitating trade caravans across the empire. This improved infrastructure lowered costs and communication barriers for merchants.

Expanding Trade Networks through Conquest

As the Mongols continued expanding territories under Kublai Khan, they extended their vast trade networks in the process. Their Eurasian conquests connected established commercial hubs like China to the Middle East, Russia, Persia and Europe - overland routes like the famous Silk Road as well as maritime trade networks:

“By linking Russia, Persia, India, Southeast Asia, and China, the Mongol Empire created the first ‘world economy.’ Ideas, goods, and technologies within this world economy moved with unprecedented ease.” (Goucher 248)

This facilitated valuable cross-cultural exchange. Expanding territories meant more access to trade cities, ports and markets on an intercontinental scale. Chinese silk, porcelain, tea and gunpowder spread through Arab world to Europe; European wool, silver, weapons and glassware made its way to China.

Not only did conquest give foreign merchants expanded access to new territories, it also enabled the Mongols to tax goods traveling through their lands and profit from vibrant trade activity made possible by their empire-building.

The vast extent of Mongol conquests across Eurasia

The extent of lands conquered by Mongols in the 13th and 14th centuries.

Implementing the Pax Mongolica

The increased stability and security provided by Mongol rule throughout Asia also facilitated trade. This period of stability has been called the Pax Mongolica. With one government administering many areas of Asia and keeping the routes between them secure, merchants could carry valuable goods for thousands of miles without threat from bandits or local tribes:

“During the Pax Mongolica… travelers using the Silk Road between China and Europe enjoyed relatively safe passage. With most of the Eurasian landmass under Mongol control, foreign merchants and envoys traveled freely between China and Persia.” (Allsen 94-95)

By enforcing law and order and suppressing tribal infighting or highwaymen, Mongol rulers enabled much freer movement for legitimate traders traveling overland routes through Central Asia to China. This stability expanded the volume and geographic spread of commercial activity.

Developing a Commercial Capital at Khanbaliq

As part of consolidating power after conquering China in 1279, Kublai Khan established a new capital city which he named Khanbaliq. This site in modern day Beijing became the political and economic center of the Yuan dynasty. Khanbaliq developed into a thriving metropolis and hub for regional and international trade in East Asia under Kublai’s rule.

Several factors allowed Khanbaliq to flourish as a commercial city, attracting merchants from across China, Mongolia, Persia, and Central Asia. For one, it was strategically located on trading routes to take advantage of commerce traveling overland between Russia, Persia and from maritime Silk Road ports. It had access to key waterways as well, built near major rivers with canals connecting it to seaports farther South like Hangzhou.

As his capital, Kublai invested heavily in Khanbaliq’s infrastructure and buildings. Careful urban planning and facilities like warehouses, shops, admin offices and wealthy estates made it an attractive base for traders:

“It quickly became an architectural wonder, filled with temples, churches, mosques, and Marco Polo’s famous ‘3000 bathhouses.’ Khanbaliq boasted markets, wide streets, parks and quarters for foreigners.” (Rossabi 17)

As the empire’s political and economic center under Mongol rule, the capital drew in merchants conducting business with the Yuan court and handling imperial taxation and finance. Its cosmopolitan, well-developed urban environment and facilities proved a major boon for domestic and international trade during Kublai’s reign.

Detail of Khanbaliq showing its layout and buildings

13th Century drawing of Kublai Khan’s capital Khanbaliq

Promoting Trade through Paper Currency

Another important policy which expanded commerce both domestically and internationally under Kublai Khan was the adoption of paper currency as a universal medium of exchange. Starting around 1260, the Mongols began issuing early banknotes which could be redeemed for silk, gold or silver bullion. By 1287 this paper currency was declared the sole legal tender across the Yuan Dynasty under Kublai’s rule:

“For the first time in history, paper currency became a valid means of exchange in all parts of Eurasia under its control. By this time it circulated from the ports of Southern China to Tabriz in Northwestern Persia without difficulty.” (Ashtor 119)

This paper money provided a dependable currency for trading which expanded the possibilities of commercial transactions. Before, trade often relied on barter of goods or currencies like gold coins accepted only regionally. Paper money facilitated smoother deals and tax payments to the Khan. Through monopolizing paper currency across Asia, Kublai unified and expanded economic exchange.

However, inflation from overprinting money later devalued the currency. By 1353, paper money was abandoned in China. Still, its introduction spurred new heights in commercial activity for many decades both domestically and along trade routes like the Silk Road.

Cultural Exchange & Religious Tolerance

While conquering new territories to expand Mongol rule, the Khans also facilitated important cultural exchange through increased trade networks. Openness to foreign ideas, religions and innovation played a key role in encouraging commerce despite ethnic differences across the multi-cultural empire.

As Ashtor notes, the Mongols “were inclined to be tolerant and did not interfere with the religions of the conquered peoples” (117). This religious and cultural tolerance enabled freer movement and commercial cooperation between diverse Persian and Chinese merchants coexisting under Mongol authority.

Diverse foreign imports also expanded the range of products available in Yuan China. Islamic astronomers, doctors, architects and artisans shared innovations with China. Global products like Middle Eastern foods and medicines, European fabrics and Indian gemstones arrived in Mongol-era China via expanded trade networks, changing both technology and consumer tastes.

This cultural blending also went both ways, as Chinese goods and knowledge spread West. The life and travels of Marco Polo illustrated this vibrant exchange. During his 17 years serving under Kublai, Polo noted the global trade bringing Chinese silk, porcelain, coal, saltpeter and more to Europe in exchange for goods like olive oil, steel weapons or Roman glassware arriving in Khanbaliq. This influential transmission shaped development across Eurasia.

Marco Polo traveling on the Silk Road

Marco Polo portrait

Taxing Trade Activity & Commerce

While their tolerance and unified rule encouraged trade across Asia, the Mongols also benefited directly by taxing a range of commercial activity happening under their control. Trade not only expanded during the Pax Mongolica – it could also be lucratively taxed to fill imperial coffers.

This ranged from customs duties on certain imports and exports passing through ports to levies on profits from merchants’ overland trade activity:

“During the Mongol era, merchants traveling through Mongol territory were subject to taxes in kind of 10 percent at designated stops.” (Tsai 242)

Controlling territory across the Silk Road gave Mongol authorities ample opportunity to tax goods passing through its trade routes. Documents from the Office of Silk Bureaus overseeing commerce detail extensive taxation on textiles, metal goods, livestock, food stuffs and many imported or re-exported products. Regulations like official trade licenses, quotas and inspections enforced compliance.

Beyond activity along the famous Silk Road, oceanic transit also contributed customs revenue as Mongol rulers extracted harbor duties on ships from India, Southeast Asia or the Middle East docking at South China ports.

Through promoting trade while also judicious taxation to fund their empire, Mongol rulers like Kublai Khan reaped economic benefits from the vibrant commercial expansion they enabled across 13th century Asia. Their imperial control over trade routes combined with generally pragmatic policies towards merchants fueled overland and maritime commerce connecting China to Europe and Asia.


In his role governing China and the Mongol Empire, Kublai Khan implemented a range of policies and initiatives that expanded both domestic and international trade. Improving infrastructure like roads and canals, securing trade routes under the Pax Mongolica, developing commercial cities like Khanbaliq and introducing paper currency all facilitated trade in goods like silk and porcelain as well as transmission of ideas and technology on an intercontinental scale. The increased volume and global reach of overland and maritime trade networks connecting distant cultures while generating tax revenue enabled the Mongol Empire’s economic expansion and success consolidating rule under Kublai and later Khans.

Through infrastructure upgrades, territorial expansion, political stability, vibrant cosmopolitan hubs and openness towards commercial activity happening within its borders, Mongol administration structured favorable conditions that caused trade to thrive across their empire. This trade not only connected distant lands but financed Mongol rule while shaping the trajectory of economic and technological development across Eurasia.

Works Cited

Allsen, Thomas T. “Mongolian Princes and Their Merchant Partners, 1200-1260.” Asia Major, vol. 2, no. 2, Taylor & Francis, Ltd., 1989, pp. 83–126,

Ashtor, E. “The Pattern of Trade in Central Asia During the Mongol Period.” Israel Academy of Sciences and Humanities Proceedings, vol. 4, no. 7, 1970, pp. 115–147,

Goucher, Candice Lee and Linda Ann Walton. World History: Journeys from Past to Present. Routledge, 2013.

Rossabi, Morris. Khubilai Khan: His Life and Times. U California Press, 1988.

Tsai, Shih-Shan Henry. Perpetual Happiness: The Ming Emperor Yongle. U Washington Press, 2001.