The World Economy by the OECD Development Centre
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Chinese Economic Performance in the Long Run

China now plays a much bigger role in the world economy and its importance is likely to increase further. Angus Maddison has tried to assess why and how this acceleration occurred and to throw light on future potential. He has also made a considerable effort to recast the estimates of Chinese GDP growth to make them conform to international norms.

Reasons for Taking a Long View

In order to understand contemporary China it is useful to take a long comparative perspective. In many respects China is exceptional. It is and has been a larger political unit than any other. Already in the tenth century, it was the world’s leading economy in terms of per capita income and this leadership lasted until the fifteenth century. It outperformed Europe in levels of technology, the intensity with which it used its natural resources and its capacity for administering a huge territorial empire. In the following three centuries, Europe gradually overtook China in real income, technological and scientific capacity. In the nineteenth and first half of the twentieth century, China’s performance actually declined in a world where economic progress greatly accelerated.

A comparative analysis of Chinese performance can provide new perspectives on the nature and causes of economic growth. It can help illuminate developments in the West as well as in China. In the past, analysis of economic progress and its determinants has had a heavy Eurocentric emphasis. Assessment of the Chinese historical record has been highly Sinocentric. A more integrated view can illuminate both exceptionalism and normality and provide a better understanding of the reasons for the rise and decline of nations.

China is likely to resume its role as the worlds largest economy by 2015

Adoption of more distant horizons can clarify causal processes. Growth analysis has concentrated on the past two centuries of capitalist development in which rapid technical change, structural transformation and rising per capita incomes were the norm. Earlier situations where per capita income was fairly static are usually neglected because it is assumed there was no technical change. But extensive growth — maintaining income levels whilst accommodating substantial rises in population — may also require major changes in the organisation of production. Technological progress needs to be interpreted broadly. It should not be restricted to advances in machinofacture, but should encompass innovations in administration, organisation and agricultural practice.

A long view can also help understand China’s contemporary policies and institutions. Echoes from the past are still important.

China was a pioneer in bureaucratic modes of governance. In the tenth century, it was already recruiting professionally trained public servants on a meritocratic basis. The bureaucracy was the main instrument for imposing social and political order in a unitary state over a huge area. The economic impact of the bureaucracy was very positive for agriculture. It was the key sector from which they could squeeze a surplus in the form of taxes and compulsory levies. They nurtured it with hydraulic works. Thanks to the precocious development of printing they were able to diffuse best practice techniques by widespread distribution of illustrated agricultural handbooks. They settled farmers in promising new regions. They developed a public granary system to mitigate famines. They fostered innovation by introducing early ripening seeds which eventually permitted double or triple cropping. They promoted the introduction of new crops — tea in the T’ang dynasty, cotton in the Sung, sorghum in the Yuan, and new world crops such as maize, potatoes, sweet potatoes, peanuts and tobacco in the Ming.

Agricultural practice compensated for land shortage by intensive use of labour, irrigation and natural fertilisers. Land was under continuous cultivation, without fallow. The need for fodder crops and grazing land was minimal. Livestock was concentrated on scavengers (pigs and poultry). Beef, milk and wool consumption were rare. The protein supply was augmented by widespread practice of small–scale aquaculture.

Agriculture operated in an institutional order, which was efficient in its allocation of resources and was able to respond to population pressure by raising land productivity. Landlords were largely non–managerial rentiers. Production and managerial decisions were made by tenants and peasant proprietors who could buy and sell land freely and sell their products in local markets.