For a long time, a great part of the Western Xia economy was still based on nomad economy with large cattle herds on the wide grassland plains within and west of the great Yellow River bend. More to the south of modern Shaanxi area, where the part of the Chinese population was greater than in the west, agriculture was the main economical tradition. The largest part of the territory was owned by the state or the emperor and was given to farming peasants who in turn had to pay taxes. Most other parts belonged to the Tangut aristocracy and to state officials, but also to Buddhist and Daoist monasteries. Only few peasants and private persons owned larger parts of land, but it was allowed to open up and to new land in mountainous and remote areas.
The rulers Li Jiqian 李繼遷 and Li Deming 李德明 supported the construction of irrigation canals that were crucial for the development of a qualified agriculture in arid areas, especially around the capital Xingqing 興慶 (modern Yinchuan 銀川/Ningxia). One of these cannels is called “Royal cannel of the Li [clan]” (Liwang qu 李王渠). The produced grain was stored in imperial granaries (yucang 衘倉). Although far the greatest part of the peasants were Chinese, in the course of time more and more Tangut or other Non-Chinese engaged in farming instead of cattle breeding. A very important and successful economical sphere was the production of woolen products, basing on the large herds. Wall paintings in stone caves depict scenes of daily life and of artisanry and craftsmenship. Iron production was well developed - partially due to the permanent warfare with the neighboring countries - as well as pottery. Western Xia porcelain did not have the same quality as Song porcelain, but it shows a unique type of decoration.
Warfare activities were never an earnest impediment for international trade between the Tangut empire and its neighbors. There existed special frontiers markets (quechang 榷場, smaller markets called heshi 和市) to supply the needs of the own country and to export national products. A special kind of exchange of goods were the so-called tributary presents that the Western Xia presented to the mightier neighbors, either the Liao, Jin, or Song. In turn, the Xia embassadors and tradepeople obtained goods from China, like silk, gauze, incense and medicine, porcelain, lacquerware, ginger, and so on. Except of kettle and depending products like wool, fabric, felt, and leather, the Xia empire exported salt (later prohibited for Chinese import), jade, honey, rhubarb (daihuang 大黃), musk, and herbs. Although barter trade was common an wide areas, the Xia emperors had casted (not minted!) their own coins.
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