0.2 Historic perspectives: economic and population growth  (Page 3/10)

Further perspective - the rise of the chinese economy

Any economist in 21st Century needs to understand the rise of China. When the author began teaching Economic Development 45 years ago he had little to say about China.

Why?

Because it was such a closed society then. Economists knew little about Chinese industry, agriculture or trade. Now that many flows of information on China have opened it is imperative that we develop an understanding of both ancient and modern China.

Consider some pertinent aspects of Chinese history:

In China during the Ming Dynasty (1402-1626) Chinese per capita GDP was probably about equal to that of Britain. By the early 1400’s, Chinese technology was, most probably superior to that of Europe. This was surely the case in maritime technology: large Chinese ships had sailed all the way to the Cape of Good Hope in Southern Africa. Well before the voyages of Columbus and Magellan China ruled the seas. Chinese Admiral Zheng He took a huge, well-armed fleet of large ships to East Africa, bearing gifts from the emperor. Admiral Zheng died in 1433. For reasons still unclear today, the Mandarin ruling class then began to view technological progress as a threat to their status, and they made the grip of feudalism even tighter. The Mandarins made building a ship with more than 2 masts a crime punishable by – death. All of Admiral Zheng’s navigational data was destroyed. In ensuing decades, all the great Chinese ships were recalled and then burned while other technologies were suppressed. China turned sharply inward. Per capita income growth stagnated for the remainder of the Ming Era ( 1402-1626 ). David Li, Hanhui Guan&Stephen Broadberry (2014). “China, Europe and the Great Divergence: A Study in Historical National Accounting, 980-1850”.

By 1626, the end of the Ming Era and the dawn of the Qing Empire (1644) per capita income was about half that of preindustrial Britain.

At that time, agriculture was 90% of Chinese GDP. From 1500-1600 the national savings rate was, as best as we can tell, negative , i.e. There was virtually no accumulation of capital during that period. This makes growth impossible, as we shall see.

Nearly four more centuries of economic stagnation followed, even as Britain and then, Western Europe and North America entered a period of unprecedented technological and institutional innovation that led to the Industrial Revolution in the early 1800s.

Comparisons between the U.S. and the Chinese experience are striking, as noted in [link] .

The period 1910-1970 was especially catastrophic for the Chinese economy: revolution and civil war early on, followed in the 1930s by a brutal Japanese occupation, revolution again in the 1950s, famine, purges, and rampaging “red guards” under Mao Tse-tung.

In sum, the Chinese economic experience from 1400-1980 may have been the most wretched in world history, considering that China was almost on an equal footing with Britain in 1400 . But, less than 25 years after the 1982 reforms introduced by Premier Deng Xiaoping, there was a complete reversal of fortune: Chinese GDP grew 10-fold in a quarter century. Note that the U.K. required 70 years after 1830 just to grow 4-fold. Note again, by 2011 U.S. per capita GNP was only 7 times that of China.