China Growth not Unprecedented

Tuesday, January 15th, 2008

Our inaugural post will be an academic paper written by Shoshannah Zirkin. Ms. Zirkin is a graduate student at New York University working towards Masters Degrees in Chinese History and Library Sciences. Daniel Turgel contributed to the research for this paper.

This paper tries to compare China's rise to economic might with its own economic history, as well as compare it to that of the United States from 1820 to 1870, exactly the time when China began to crumble economically thanks to western imperialism and invasion.


China’s Second Rise as an Economic Power
by Shoshannah Zirkin
For over a decade the media has painted China as a dragon waking from a generation of hibernation. Exotic and unpredictable, newspapers claim her vast frontier is uncharted territory, a blank map on which courageous foreign investors can draw their own lines and mark new paths to infinite profits. Those who brave the heat of her fire have unprecedented opportunities. As the government slowly disassembles the fortified bastion of communism, windows of opportunity are opening, and those hungry for wealth and opportunity are running free. “Everybody wants a slice of the Chinese miracle that is powering the world economy,” explains Australian journalist Christopher Russell.[1] Miracle, he claims, and he is not alone. China’s success is lauded by the public throughout the world, as if the country has never before obtained economic achievement. People exclaim that growth of such nature has never been seen before. More startling than a stirring dragon is the young yet forgotten history of China in 1820, when her share led the world GDP at 32.9%, a figure unmatched by a single country anywhere on the globe in the last two centuries.[2]

As the world watches China move ahead, it becomes increasingly beneficial to take a look at China’s past. From 618-907CE China was united under the rule of the Tang Dynesty. This was a period of development and stability, often regarded as China’s Golden Age. The capital city, present day Xi’an, was at the time the most populous city in the world, and new cosmopolitan centers sprouted along the recently built Grand Canal. Strict civil service exams brought reverence and sustained authority to government positions, and veneration for the arts brought forth tremendous talent in the form of both poetry and painting.[3] Europe did not see such high levels of cultural achievement until the Renaissance, centuries later.

In the early thirteenth century the “Chinese were still richer on average than Europeans, and their economy was also larger than that of Western Europe.”[4] International trade prospered along the Silk Road and via maritime trade with Southeast Asia. The Portuguese first anchored on China’s coast in the sixteenth century, and the British followed shortly thereafter. The Europeans were frustrated by the limited access implemented by the Qing Dynasty, who restricted foreign trade to the single port of Canton in the South East of China. While interested in selling products of their own, such as tea, silk, and porcelain, the Chinese found European goods inferior. They agreed to trade, but only in exchange for silver. This arrangement created a tremendous trade deficit. In response the Europeans began to trade opium for goods. An addictive currency, the Chinese became hooked on opium, and the balance of trade soon turned. This exchange resulted in the infamous Opium Wars and humiliating Treaty of Nanking, signed by China in 1842. The Chinese were no match for the British, who fought with technology recently developed during the industrial revolution, a transformation that China was yet to encounter.[5] The Chinese lost territorial integrity and authority over international trade. It is therefore no surprise that China’s staggering 32.9% share of world GDP in 1820 dropped to 17.2% by 1870. In contrast, the share of world GDP of Western Europe rose from 23.6% in 1820 to 33.6% in 1870.[6]

The Qing Dynasty fell in 1911, ending dynastic rule in China. Chaos followed. Thirty years of Civil War accompanied by the Japanese Invasion and World War II. In 1949, Chiang Kaishek and the Nationalist Party were defeated by Mao Zedong and the Chinese Communist Party. The latter gained control over Mainland China, unifying China for the first time in decades. This victory was the start of many years of seclusion for China and the Chinese people. For thirty years, trade with China was virtually non-existent. This changed with the death of Mao Zedong and other original Communist Party leaders such as Zhou Enlai. Reforms implemented by Deng Xiaoping opened China’s boarders, and resulted in the rapid economic development that we still see today.

In his book, China Shakes the World, James Kygne argues that China’s current growth is new to world history. He explains, “China’s emergence is different and unprecedented… the sheer scale and speed of the renaissance puts it in a class of its own.”[7] While Kygne has a point concerning scale in terms of population, his statement that the dramatic speed of China’s growth is unprecedented is historically inaccurate.

From 1820 to 1870, the US population increased by 25 million people, a mere 8% of world population growth.[8] At the beginning of the nineteenth century, the United States was first establishing the ideals of an independent democratic nation. Jacksonian America, defined by the frontier and represented by the cowboy, was not primarily concerned with international politics. Statistics reflect this claim, as in 1820, US share of world GDP measured only 1.8%. Industrialization coupled with population growth resulted in a fivefold increase in America’s share of the world GDP by 1870, as America’s piece of the world GDP pie increased from 1.8% to 8.9% in fifty years.[9]
This tremendous spurt in economic growth in America signaled the dawning of a new era in the world’s development. The new world had begun to establish itself as a tour de force in all aspects of global commerce. Its markets became a source for imports from Europe and Asia, its factories led the world in production of cotton textiles, and scientific discoveries such as Charles Goodyear’s vulcanization of rubber established a country which would go on to change, create, and recreate global commerce over the next century and a half.


By contrast, China’s renaissance has largely been exclusively in terms of population and economic growth, not technological breakthrough nor political reform. From 1973 to 2006, China’s population increased by approximately 350 million people, nearly 18% of the world’s population growth. During that time, China’s share of world GDP increased from 4.6%[10] to 15%.[11] Over a thirty-five year period, China’s increase in share of world GDP has increased 3.5 times. This puts China on pace only to match and not to exceed the fivefold increase already obtained by the US in the nineteenth century. Such growth is therefore not an unprecedented accomplishment. Moreover, the lack of technological innovation in China that was present in the US during its explosive stint in the nineteenth century deems China’s feats all the more arbitrary. This is because the science behind laying miles of butadiene highway, constructing dozens of modern port facilities, and planting vast stretches of fiber optic has come from the pioneering work of scientists and engineers outside China. America, on the other hand, was built largely on the ingenuity and scientific breakthroughs of its own innovative entrepreneurs and inventors whose work that has shaped this modern life is now so take for granted.


Still, well educated politicians, journalists, and citizens throughout the world continue to laud China’s “unmatched” economic boom. Helmut Schmidt, the first German Chancellor ever to travel to China remarked in a hyperbole that, “It’s a miracle, really. There has never been such a phenomenon in the world’s history.”[12] Why must something be record-breaking to be grand? Although this is not the first time in history that China has been successful, and although China is not the only country in history to experience such growth, her present success nevertheless is still phenomenal.

“Napoleon, it is said, once remarked, ‘Let China sleep, for when she wakes, she will shake the world.’”[13] While the dragon that we know to be China began to stir in the late 1970s and early 1980s, this was not the first time she awoke from a nap! Thirty years in hibernation was preceded by a rich history and tremendous economic success. A height of fortune that today’s China has still not matched. In looking at China’s past and in comparing China to the US, we can readily predict that China will continue to lead the world in economic growth and will have ever-increasing influence and power. To deny China of her unprecedented past is to deprive the dragon of a lifetime of history. Those who shine a light into her dark cave richly reveal a China that led the world’s economy before and elevate her image beside a China that is likely to accomplish the same feat again. But, sadly, many commentators miss the fact that the most important aspect of this historic rise – the speed and momentum of growth - has in fact been done before, right here at home. Thus, given the way that America has challenged and changed the traditional functioning of human civilization, perhaps then the true miracle of China is not in what we have seen already, but rather what contributions to human progress she is yet to offer.
[1] Christopher Russell, “Hong Kong Gateway; Miracle market beckons SA first to the rapidly growing markets of Mainland China,” The Advertiser (Australia), 7 November 2006, 48.
[2] Angus Maddison, The World Economy – A Millennial Perspective.
[3] Valerie Hansen, The Open Empire: A History of China to 1600 (New York: W. W. Norton & Company, 2000), 191-197.
[4] James Kynge, China Shakes the World: A Titan’s Rise and Troubled Future (New York: Houghton Mifflin Company, 2006), 38.
[5] June Grasso, Jay Corrin, and Michael Kort, Modernization and Revolution in China (New York: M. E. Sharpe Inc., 1997), 31.
[6] Angus Maddison, The World Economy – A Millennial Perspective.
[7] Ibid., 27.
[8] FIND SOURCE!
[9] Angus Maddison, The World Economy – A Millennial Perspective.
[10] Ibid.
[11] The International Monetary Fund “World Economic Outlook Database,” available from http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP); accessed 11 November 2007.
[12] No Author. “China to Overtakeermany in a Few Years,” Xinhua General News Service, 14 September 2006.
[13] James Kynge, China Shakes the World, xiv.