Guan Zhong

Guan Zhong was born in Yingshang, and became acquainted with Bao Shuya at an early age, when they became business partners. The Shiji records that, as partner, Guan Zhong often took more than his share of the profits, in effect cheating Bao Shuya. Bao, however, recognised his impoverished background and was not offended.

Subsequently, Guan Zhong was appointed tutor to Prince Jiu, the younger brother of the ruling Duke Xiang of Qi. Bao Shuya, meanwhile, became tutor to Jiu's younger brother, Prince Xiaobai.

In 686 BC, Duke Xiang was murdered in a palace coup by two of his ministers, who then installed Gongsun Wuzhi, a scion of the ducal house, as the new Duke. Recognising that they were in mortal danger, both Prince Jiu and Prince Xiaobai fled with their respective tutors. Prince Jiu fled to the State of Lu, while Prince Xiaobai went to the State of Ju.

In 685 BC, Gongsun Wuzhi himself was killed in another palace coup, and the ministers of Qi sent envoys to Ju, hoping to receive Prince Xiaobai back and succeed to the duchy. On hearing of this, Lu also sent Prince Jiu towards Qi, while Guan Zhong intercepted Prince Xiaobai to prevent his return. In the resulting conflict, Guan Zhong shot an arrow at Xiaobai which hit his belt buckle. Xiaobai pretended to cough blood and collapse, tricking Guan Zhong into thinking he was mortally wounded.

Eventually, Xiaobai won the race back to Qi, and was installed as Duke. The State of Lu attempted to enforce Prince Jiu's claim, but was defeated in battle, after which Qi forced Lu to execute Prince Jiu and send Guan Zhong back as a prisoner. Xiaobai originally wanted to execute Guan Zhong as well, but Bao Shuya strongly recommended sparing him and elevating him to chancellor, even though that meant he would outrank Bao himself. Xiaobai was eventually convinced.

Duke Huan had inherited a state in turmoil, after three years of civil wars and usurpation had severely depleted the treasury. As Chancellor, Guan Zhong instituted extensive reforms aimed at organising and strengthening the Qi state.

Administratively, the capital was divided into 21 districts: six of merchants, which provided the Qi state's trade revenue, and fifteen of attendants, which provided the core of the Qi army. Similarly, the population outside the capital was organised: 30 households were formed into one village, 10 villages as one troop, 10 troops as one district, 3 districts as one county, and counties grouped into five regions. Administrators were appointed at every level, with the regional administrators reporting on their jurisdictions to the Duke every year.

Economically, Guan Zhong disbanded the well-field system instituted since the Zhou Dynasty; instead, all land was to be taxed according to its productivity. At the same time, Qi's coastal position was exploited through the expansion of fisheries and salt production, while trade was encouraged through certain privileges. For instance, people bearing goods to market on foot, and carriages arriving empty at markets to make purchases, were not subject to tolls; this encouraged the use of the state-managed markets.

Guan Zhong further proposed that the "goods of the mountains and seas" (namely iron and salt) should be state managed, a policy that would evolve into state monopolies later in Chinese history. Similarly, a price-regulation scheme existed for food, with granaries buying grain in bounty years to be released into the market in lean years. Finally, coinage was also unified to encourage trade within Qi.

Under Guan's guidance several important economic reforms were introduced. He created a uniform tax code and also used state power to encourage the production of salt and iron.

He believed that monopolizing the nature resources was helpful on improving the government income, with fewer complaints from the public than raising taxes. The strategy was described by himself to the Duke of Huan as "managing the mountain and the sea（官山海)", which mainly refers to iron mine from the mountain and salt from the sea. Under his policy, private business who produce salt by boiling seawater and iron by mining must sell all outputs to the government, and the government resell refined salt and iron products, with huge price gap, to all household in State of Qi.

Historians usually credit Guan Zhong for introducing state monopolies controlling salt and iron.

In the record of Guanzi Chapter 84, Duke of Huan wanted to restrain the threat from State of Hengshan (衡山国) and asked Guan for solution. State of Hengshan was famous for its weapon production. Guan then ordered officials to buy arms from State of Hengshan in large quantities. After ten months, worrying that the price will continuously grow up, State of Yan, State of Dai and later State of Qin followed up the buying. The price then jumped sharply and, as a result, almost all household in State of Hengshan switched to make weapons instead of farming. One year later, Guan ordered officials to buy rice from State of Zhao, at a price more than three times higher than normal. By seeing the potential huge profit, State of Hengshan sold its rice inventory to officials from State of Qi. Afterwards, Guan suddenly ordered State of Qi's army to invade State of Hengshan. With selling out of weapon and rice, State of Hengshan soon surrendered.

Some historians marked Qi-Hengshan War the early form of Economic Warfare.[14]

He is listed as the author of the Guanzi encyclopedia, actually a much later (of the late Warring States period) compilation of works from the scholars of the Jixia Academy.