In 927 the Kitan finally destroyed Po-hai. This brought many Tungus
tribes, including the Jurchen (Juchen), under Kitan dominance. Then, in
936, the Kitan gained the allegiance of the Turkish general Shih
Ching-t'ang, and he was set on the Chinese throne as a feudatory of the
Kitan. It was hoped now to secure dominance over China, and accordingly
the Mongol name of the dynasty was altered to "Liao dynasty" in 937,
indicating the claim to the Chinese throne. Considerable regions of
North China came at once under the direct rule of the Liao. As a whole,
however, the plan failed: the feudatory Shih Ching-t'ang tried to make
himself independent; Chinese fought the Liao; and the Chinese sceptre
soon came back into the hands of a Sha-t'o dynasty (947). This ended the
plans of the Liao to conquer the whole of China.

For this there were several reasons. A nomad people was again ruling
the agrarian regions of North China. This time the representatives of
the ruling class remained military commanders, and at the same time
retained their herds of horses. As early as 1100 they had well over
10,000 herds, each of more than a thousand animals. The army commanders
had been awarded large regions which they themselves had conquered. They
collected the taxes in these regions, and passed on to the state only
the yield of the wine tax. On the other hand, in order to feed the
armies, in which there were now many Chinese soldiers, the frontier
regions were settled, the soldiers working as peasants in times of
peace, and peasants being required to contribute to the support of the
army. Both processes increased the interest of the Kitan ruling class in
the maintenance of peace. That class was growing rich, and preferred
living on the income from its properties or settlements to going to war,
which had become a more and more serious matter after the founding of
the great Sung empire, and was bound to be less remunerative. The herds
of horses were a further excellent source of income, for they could be
sold to the Sung, who had no horses. Then, from 1004 onward, came the
tribute payments from China, strengthening the interest in the
maintenance of peace. Thus great wealth accumulated in Peking, the
capital of the Liao; in this wealth the whole Kitan ruling class
participated, but the tribes in the north, owing to their remoteness,
had no share in it. In 988 the Chinese began negotiations, as a move in
their diplomacy, with the ruler of the lat