Nomadic states in Inner Asia were generated by external relations with state societies. Because the Hsiung-nu state could not have supported itself by exploiting the relatively undifferentiated and extensive pastoral economy, the state hierarchy was financed by exploiting the resources available from outside of the steppe. The nomads on the steppe were organized into a powerful military force that was used to systematically exploit the Chinese economy. The Hsiung-nu raided the frontier directly and then used the disruptions they caused as a tool to extort trade and subsidies from the Han court, thus maintaining a monopoly on this flow of Han goods to the steppe, which gave it great economic power and stability. The imperial level of Hsiung-nu government was therefore primarily concerned with conducting foreign affairs, organizing military campaigns, and maintaining unity on the steppe, while it ceded power in domestic affairs to indigenous tribal leaders. This created an imperial confederacy that acted as an autocratically ruled state in its dealings with China but that remained federally structured internally. This form of organization proved remarkably stable and provided the model for later empires established by nomads on the steppe.

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