In 960, the Song Dynasty gained power over most of China and established its capital in Kaifeng, starting a another period of economic prosperity. It was the first government in world history to issue banknotes or paper money, and implemented the first Chinese policy to establish a permanent standing navy.

The economic progress of Song can be attributed to the increased agricultural production. Improved agricultural techniques and tools are important for the development. The introduction of paper money and improvement of the transport facilitated the growth of market and the influx of goods form around the country.

The Song was a period of progress in technology and inventions. The application of gunpowder developed rapidly, and the other two of China's Four Great Inventions – printing and compass were invented.

The Song is marked by a revival of old Confucian traditions after the Tang age of Buddhism and a renewal of Confucian learning. Song culture was also a culmination of the heritage of two thousand years of culture. It was regarded as the turning point in China's development of an urban culture.