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Chang'an, the Tang capital

Although Chang'an was the capital of the earlier Han and Jin dynasties, after subsequent destruction in warfare, it was the Sui dynasty model that comprised the Tang era capital. The roughly square dimensions of the city had six miles (10 km) of outer walls running east to west, and more than five miles (8 km) of outer walls running north to south. The royal palace, the Taiji Palace, stood north of the city's central axis. From the large Mingde Gates located mid-center of the main southern wall, a wide city avenue stretched from there all the way north to the central administrative city, behind which was the Chentian Gate of the royal palace, or Imperial City. Intersecting this were fourteen main streets running east to west, while eleven main streets ran north to south. These main intersecting roads formed 108 rectangular wards with walls and four gates each, and each ward filled with multiple city blocks. The city was made famous for this checkerboard pattern of main roads with walled and gated districts, its layout even mentioned in one of Du Fu's poems. During the Heian period, the city of Heian kyō (present-day Kyoto) of Japan like many cities was arranged in the checkerboard street grid pattern of the Tang capital and in accordance with traditional geomancy following the model of Chang'an. Of these 108 wards in Chang'an, two of them (each the size of two regular city wards) were designated as government-supervised markets, and other space reserved for temples, gardens, ponds, etc. Throughout the entire city, there were 111 Buddhist monasteries, 41 Taoist abbeys, 38 family shrines, 2 official temples, 7 churches of foreign religions, 10 city wards with provincial transmission offices, 12 major inns, and 6 graveyards. Some city wards were literally filled with open public playing fields or the backyards of lavish mansions for playing horse polo and cuju (Chinese soccer). In 662, Emperor Gaozong moved the imperial court to the Daming Palace, which became the political center of the empire and served as the royal residence of the Tang emperors for more than 220 years.

The Tang capital was the largest city in the world at its time, the population of the city wards and its suburban countryside reaching two million inhabitants. The Tang capital was very cosmopolitan, with ethnicities of Persia, Central Asia, Japan, Korea, Vietnam, Tibet, India, and many other places living within. Naturally, with this plethora of different ethnicities living in Chang'an, there were also many different practiced religions, such as Buddhism, Nestorian Christianity, and Zoroastrianism, among others. With the open access to China that the Silk Road to the west facilitated, many foreign settlers were able to move east to China, while the city of Chang'an itself had about 25,000 foreigners living within. Exotic green-eyed, blond-haired Tocharian ladies serving wine in agate and amber cups, singing, and dancing at taverns attracted customers. If a foreigner in China pursued a Chinese woman for marriage, he was required to stay in China and was unable to take his bride back to his homeland, as stated in a law passed in 628 to protect women from temporary marriages with foreign envoys. Several laws enforcing segregation of foreigners from Chinese were passed during the Tang dynasty. In 779 the Tang dynasty issued an edict which forced Uighurs in the capital, Chang'an, to wear their ethnic dress, stopped them from marrying Chinese females, and banned them from passing off as Chinese.

Chang'an was the center of the central government, the home of the imperial family, and was filled with splendor and wealth. However, incidentally it was not the economic hub during the Tang dynasty. The city of Yangzhou along the Grand Canal and close to the Yangtze River was the greatest economic center during the Tang era.

Yangzhou was the headquarters for the Tang government's salt monopoly, and was the greatest industrial center of China. It acted as a midpoint in shipping of foreign goods that would be organized and distributed to the major cities of the north. Much like the seaport of Guangzhou in the south, Yangzhou boasted thousands of foreign traders from all across Asia.

There was also the secondary capital city of Luoyang, which was the favored capital of the two by Empress Wu. In the year 691 she had more than 100,000 families (more than 500,000 people) from around the region of Chang'an move to populate Luoyang instead. With a population of about a million, Luoyang became the second largest city in the empire, and with its closeness to the Luo River it benefited from southern agricultural fertility and trade traffic of the Grand Canal. However, the Tang court eventually demoted its capital status and did not visit Luoyang after the year 743, when Chang'an's problem of acquiring adequate supplies and stores for the year was solved. As early as 736, granaries were built at critical points along the route from Yangzhou to Chang'an, which eliminated shipment delays, spoilage, and pilfering. An artificial lake used as a transshipment pool was dredged east of Chang'an in 743, where curious northerners could finally see the array of boats found in southern China, delivering tax and tribute items to the imperial court.