The Pearl River Delta of southern China was an agriculturally rich region. Formed of alluvial soils that had been captured from the silt flowing down from the major rivers, these sand flats, as the Chinese called them, were worked and reworked until they became very productive rice paddies that by the sixteenth century annually produced two crops of rice and one of vegetables and wheat. Peasant farmers produced on their own plots much of the food the family consumed. However, agriculture in the region could not be called subsistence agriculture, for many nonfood commercial crops were grown and exchanged in markets that dotted the countryside. Besides rice, peasant farmers in the Pearl River Delta grew sugarcane, hemp, cotton, and mulberries to feed silkworms, among other crops.

But while commerce and market exchanges were an important part of the rural economy until about 1550, the rural economy was not commercialized. As the population grew from 1400 to 1550, the gross volume of crops marketed and the number of rural markets both increased, but they did so at the rate of population growth. The proportion of agricultural land devoted to commercial crops in 1550 was about what it had been in 1400. But after 1550 the agricultural economy of the region became highly commercialized. Markets and marketing activity expanded at a rate faster than that of the population.

The most immediate stimulus for the commercialization of the economy was the new demand for Chinese goods-in particular silk and porcelains-from European traders who arrived in the South China Sea in the sixteenth century. For the Pearl River region, the critical trade flow was triangular, linked by the Portuguese. Either with their own funds or with silver that Japanese merchants supplied, Portuguese traders headed up the Pearl River to biannual fairs in the city of Guangzhou where they exchanged silver for export goods. These goods were loaded onto ships bound for the Japanese city of Nagasaki. Japanese merchants in Nagasaki paid in silver for the Chinese goods, launching another round of trade. Trade through Manila, in the Philippines, also brought silver into the South China economy. Chinese merchants from Guangdong and Fujian provinces sailed to Manila with their goods, which the Spanish bought with silver. From there the silver flowed back to China as the Chinese commodities found their way to Europe. By 1600 this trade resulted in an annual inflow of perhaps 200, 000 kilograms of silver into the coastal economies of south and southeast China.

In the Pearl River Delta, the silk industry developed on a base that was first created by the sand-flat fields and then a particular combination of fish ponds with fruit trees. In the fifteenth century peasant farmers in the Pearl River Delta began replacing some of their sand-flat rice fields with fishponds, probably in response to increased demand from Guangzhou. On the embankments, peasant farmers in the early Ming Dynasty (1368-1644)mostly planted fruit trees, giving rise to the fruit tree and fishpond combination. The carp fed on organic matter that either dropped or was thrown into the pond, while the mud scooped up from the pond fertilized the fruit trees and the rice fields and added height to the embankments and more protection for the fishponds.

The fruit tree and fishpond culture provided a ready-made base for expansion of the silk industry. As the demand for silk increased, peasant farmers replaced the fruit trees with mulberry trees (silkworms feed on mulberry leaves)and then began digging up even more rice paddies to expand this system. By 1581 in the Longshan area of Shunde county, for example, eighteen percent of the productive land was fishponds and, combined with the mulberry trees on the embankments, accounted for about thirty percent of the cultivated land area.