Conflict with the Song
The leader sought to take advantage of the young emperor by launching an invasion on the Liao Southern Capital in the contentious Sixteen Prefectures in 986. Three large forces were sent to three different strategic locations on the approach to the Southern Capital. While initially successful, the young emperor along with the Empress Dowager led a Khitan cavalry force and defeated the Song forces at the Battle of the Qigou Pass in June. The Empress Dowager appointed Yelu Xiuge as her senior general continued attacks on the Song in retaliation until the next year.
In 1004, the Liao led a large-scale invasion of Song territory, camping out in the town of Shanyuan, about 100 miles north of the capital of Kaifeng. This resulted in the Treaty of Shanyuan, signed in mid-January, 1005. According to this treaty, the Chinese paid an annual tribute of 200,000 bolts of silk, 100,000 ounces of silver. This arrangement would remain in place with modifications until the end of the Liao Dynasty, and in fact, the Jurchen could continue this arrangement with the Song with the founding of the .
Examination System
Shengzong was also the one to institutionalize state examinations for the selection of Chinese officials, which was done in 988, based on models used by the Tang Dynasty, which had fallen in 907, and the Song Dynasty, which existed concurrently with the Liao. Despite the importance of the return of the examination system, it initially only opened the road for very small numbers, as only three to five were awarded initially, and the number only increased to between thirty and 130 candidates passed the triennial exams by 1014.
Most jinshi degree winners were not even appointed to office as aristocrats were far more likely to receive appointments. Khitan people receiving appointments were specifically through patronage as they were expressly prohibited from sitting the examinations.
Growth of Buddhism
Emperor Shengzong began the active patronage of Buddhism. Within a century of his reign, an estimated ten percent of Liao population were Buddhist monks or nuns, though this figure may have been exaggerated. While the Khitan did not associate Buddhism with the Chinese people because it was seen more as a Uyghur religion and thus not the religion of the Chinese, who they saw as inferior, what is not clear is the extent that Buddhism penetrated the Khitan population, as the bulk of Buddhist shrines and temples were located in the southern part of the domains of the Liao where the largely Chinese sedentary population resided. There is evidence to suggest that the Khitan populace maintained their animistic belief systems along with their rituals.
Innovations
During the rule of Emperor Shengzong, the Liao instituted feudal reform, spurring its economy. Prior to this, it had depended on territorial expansion, slavery, and thievery. Under Shengzong's rule, most slaves were liberated, becoming normal members of society. The most important parts of the economy from then on were animal husbandry, particularly horse and sheep raising, as well as agriculture, and fishing.
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