The Yuan Dynasty was formally proclaimed in 1271, when the Great Khan of Mongol, Kublai Khan, one of the grandsons of Genghis Khan, assumed the title of the Emperor of China, and considered his inherited part of the Mongol Empire as a Chinese dynasty. In the preceding decades, the Mongols had conquered the Jin Dynasty in Northern China, and the Southern Song dynasty fell in 1279 after a protracted and bloody war. The Mongol Yuan Dynasty became the first conquest dynasty in Chinese history to rule the entire China proper and its population as an ethnic minority. The dynasty also directly controlled the Mongolia heartland and other regions, inheriting the largest share of territory of the divided Mongol Empire, which roughly coincided with the modern area of China and nearby regions in East Asia. Further expansion of the empire was halted after defeats in the invasions of Japan and Vietnam. Following the previous Jin Dynasty, the capital of Yuan Dynasty was established at Khanbaliq (also known as Dadu, modern-day Beijing). The Grand Canal was reconstructed to connect the remote capital city to economic hubs in southern part of China, setting the precedence and foundation where Beijing would largely remain as the capital of the successive regimes that unified China mainland.
After the peace treaty in 1304 that ended a series of Mongols civil wars, the emperors of the Yuan Dynasty were upheld as the nominal Great Khan (Khagan) of the greater Mongol Empire over other Mongol Khanates, which nonetheless remained de facto autonomous. The era was known as Pax Mongolica, when much of the Asian continent was ruled by the Mongols. For the first and only time in history, the silk road was controlled entirely by a single state, facilitating the flow of people, trade, and cultural exchange. Network of roads and postal system were established to connect the vast empire. Lucrative maritime trade, developed from previous Song Dynasty, continued to flourish, with Quanzhou and Hangzhou emerged as the largest ports in the world. Adventurous travelers from far west, most notably the Venetian, Marco Polo, would have settled in China for decades. Upon his return, his detail travel record inspired generations of medieval Europeans with the splendors of the far East. The Yuan Dynasty was the first ancient economy, where paper currency, known at the time as Chao, was used as the predominant medium of exchange. Its unrestricted issuance in the late Yuan dynasty inflicted hyperinflation, which eventually brought the downfall of the dynasty.
While the Mongol rulers of the Yuan Dynasty adopted substantially to Chinese culture, their sinicization was of lesser extent compared to earlier conquest dynasties in Chinese history. For preserving racial superiority as the conqueror and ruling class, traditional nomadic customs and heritage from the Mongolian steppe were held in high regard. On the other hand, the Mongol rulers also adopted flexibly to a variety of cultures from many advanced civilizations within the vast empire. Traditional social structure and culture in China underwent immense transform during the Mongol dominance. Large group of foreign migrants settled in China, who enjoyed elevated social status over the majority Han Chinese, while enriching Chinese culture with foreign elements. The class of scholar officials and intellectuals, traditional bearers of elite Chinese culture, lost substantial social status. This stimulated the development of culture of the common folks. There were prolific works in zaju variety shows and literary songs (sanqu), which were written in a distinctive poetry style known as qu. Novels of vernacular style gained unprecedented status and popularity. Notably, the earlier two of the four great classical novels were written during the years of regime transition from Yuan to Ming Dynasties.
Before the Mongol invasion, Chinese dynasties reported approximately 120 million inhabitants; after the conquest had been completed in 1279, the 1300 census reported roughly 60 million people. This major decline is not necessarily due only to Mongol killings. Scholars such as Frederick W. Mote argue that the wide drop in numbers reflects an administrative failure to record rather than an actual decrease; others such as Timothy Brook argue that the Mongols created a system of enserfment among a huge portion of the Chinese populace, causing many to disappear from the census altogether; other historians including William McNeill and David Morgan consider that plague was the main factor behind the demographic decline during this period. In the 14th century China suffered additional depredations from epidemics of plague, estimated to have killed 25 million people, 30% of the population of China.
Throughout the Yuan dynasty, there was some general sentiment among the populace against the Mongol dominance. Yet rather than the nationalist cause, it was mainly strings of natural disasters, and incompetence governance that triggered widespread peasant uprisings since the 1340s. After the massive naval engagement at Lake Poyang, Zhu Yuanzhang prevailed over other rebel forces in the south. He proclaimed himself emperor and founded the Ming Dynasty in 1368. The same year his northern expedition army captured the capital Khanbaliq. The Yuan remnants fled back to Mongolia and sustained the regime. Other Mongol Khanates in Central Asia continued to exist after the fall of Yuan dynasty in China.