 The new capital Hangzhou grew into a major commercial and cultural center . It rose from a middling city of no special importance to one of the world 's largest and most prosperous . During his stay in Hangzhou in the Yuan dynasty ( 1260 – 1368 ) , when the city was not as wealthy as it had been under the Song , Marco Polo remarked that " this city is greater than any in the world " . Once retaking northern China became less plausible and Hangzhou grew into a significant trading city , the government buildings were extended and renovated to better befit its status as an imperial capital . The modestly sized imperial palace was expanded in 1133 with new roofed alleyways and in 1148 with an extension of the palace walls . 
