Crafts and Domestic Trade. Silk, paper, and porcelain were manufactured during the Tang dynasty. The Chinese were known for the high quality of their manufactured goods. Craft guilds appeared in many towns where craftsmen were concentrated. As a result of this industrial development, domestic trade increased. Improved transportation, as well as a new postal system that connected the capital with the outlying districts, also stimulated domestic trade.

Urban Development. Along with the growth in domestic trade, the cities and towns grew both in size and importance. Chang'an, the capital, was the focal point of the highly centralized state power and economic wealth. The city was organized in a checkerboard fashion with straight and wide north-south and east-west avenues that divided the city into 110 blocks. Chang'an had an estimated population of more than one million people...