In spite of his policies of toleration and his use of Chinese in the government, Kublai Khan and the Mongols did not want to become Chinese. As much as possible, they kept separate from the Chinese they ruled. They clung to their own values an way of life, celebrating their traditional festivals and enjoying their feasts. The women did not adapt the Chinese custom of foot binding which was just becoming a sign of high status among upper class Chinese. They continued to dress in their own clothing.
Where to put the capital was a major decision for Kublai Khan. Genghis Khan had not been interested in the sedentary way of life. For him, the empire was the saddle of his horse so he avoided what was left of the Chin capital city Chengdu (Beijing). Kublai Khan ended up building two capitals: "Upper Capital", 125 miles from Beijing, called Shangdu, and the "Great Capital", Dadu, slightly northeast of the Chin capital. (This was Coleridge's Xanadu). So as not to lose their nomadic ways, the Mongols kept a large are of steppe grass at the summer palace near the Central Capital. Shangdu, the Upper Capital, with a population was between 100,000 and 200,000, looked like a Chinese capital except for the large hunting preserve and garden it had. As time passed, Shangdu became the retreat where, because of its large hunting area, the Mongols felt closer to their nomadic values. It was a welcomed relief for Kublai Khan who never lost his fascination with the hunt.
By 1279, the high Point of Kublai Khan's rule, he had established himself as an intellectual as well as a warrior. He enjoyed the company of scholars and intellectuals, men of wit. With them he worked out a new script. In his court there was much drama, and Buddhism and Taoism (less anti-foreign than Confucianism) thrived. He saw wisdom in taxing people rather then killing them. He knew the importance of fair laws rather than trying to bribe people, because he realized that there is only enough money to satisfy a few, even with the few, there is no end to their greed, so it is better to have justice. He was tolerant of various religious groups. In order to impress on his fellow Mongols that he was indeed ruler of the world, he encouraged diplomats and traders like Marco Polo from the Far West to kowtow in his presence!
But after 1279, Kublai Khan's rule began to weaken, and his loss of power fits the familiar pattern of the disintegration of an empire. For one thing, in part to demonstrate that he really did rule the world, he launched two very costly and unsuccessful attacks on Japan. He had hoped a victory against Japan would bolster his image as a successful world conqueror, not a Chinese bureaucrat, and give him legitimacy as the Great Khan. The 25,000 men he sent against Japan in 1274 were defeated, in large part, by a typhoon. He tried again in 1281, this time sending 140,000 men, supported by additional Korean troops. As far as the Japanese were concerned, their gods protected them again by sending another divine wind, Kami kazi, which again destroyed the Mongol fleet. The l281 defeat broke his image of invincibility, andwhen he tried to re-establish it by campaigns into Southeast Asia, he failed there as well.
The Japanese offensive proved very costly financially and to pay for it, he over-taxed the people, one of the most critical reasons for a government's demise. The peasants suffered under the burden of increased taxes. There was widespread inflation because the government also printed a great deal of paper money. To offset the inflation, Kublai Khan ordered the currency devaluated 5 to 1. Supporting his northern capital required extending the Grand Canal, and the people resented the corvee demanded of them to build the 135 mile extension, completed in 1289.