During the Period of Disunion the economies of North and South China diverged in crucial ways. The devastation inflicted by repeated nomad invasions gravely disrupted agricultural production and commerce in North China. This anarchic warfare finally came to a halt after Tuoba Gui, a chief of the Xianbei steppe nomads, conquered much of the Central Plain in 398 and laid the foundations for the Northern Wei dynasty (386–534). Under Northern Wei dominion North China enjoyed a degree of political stability that eluded the more transitory Chinese-ruled dynasties in the south. Eventually the Northern Wei leaders turned away from the political and cultural traditions of the steppe and sought to refashion their state in the image of a Chinese empire. In so doing the Northern Wei promoted a synthesis of Chinese and nomadic institutions based on bureaucratic rule and a caste-like social order of hereditary occupational statuses that succeeded, at least in the short run, in reviving agricultural production. The political economy of the Northern Wei in its mature phase (after 485) recapitulated the military-physiocratic principles of the first empires: like the Qin–early Han rulers, the Northern Wei leaders sought to magnify the state's military might through equitable allocation of lands, uniform taxation in goods and labor, and universal military conscription. In contrast to the south, however, commercial development was muted and monetary circulation remained feeble.

The Northern Wei also fostered the formation of a hybrid Xianbei-Chinese ruling class through intermarriage between the Xianbei nobility and the leading Chinese aristocratic clans. Although a few favored Chinese clans were admitted to this ruling elite, in general the social power of Chinese local magnates in the north atrophied over the course of the Northern Wei dynasty. Xianbei military domination and the equal-field landholding system inaugurated by the Northern Wei did not deprive local magnates of their privileges or wealth, but they bolstered the state's control over the common people. The institutional infrastructure erected by the Northern Wei state survived the fall of the dynasty in 534 and its division into rival regimes. The success of Yang Jian, founder of the Sui dynasty (581–618), in reinstating unified imperial rule over both North and South China in 589 can be attributed in no small degree to the political and institutional achievements of the Northern Wei.