ECON 0605/ECON 2273

ECONOMIC HISTORY OF CHINA

Second Semester 2015-2016
Dr. Patrick Leung

FIRST WEEK SUMMARY

Introduction and Overview

Why do we study economic history?

Who controls the past, controls the future;

who controls the present, controls the past.
-- George Orwell, 1984

ECONOMIC GROWTH
OCCURS THROUGH ?

INVESTMENT Solovian Growth

(Robert Solow)
Increase capital (land & resources)/labor ratio
increase output per capita
Refrain from consumption in the present in order
to enjoy higher consumption in the future

COMMERCIAL EXPANSION
Smithian Growth (Adam Smith)
Increase in exchanges of goods, services, labor
and capital specialization
Trade will increase if there is :

decline in transaction costs;

decline in transportation costs;
improvement in the enforcement of property rights.

TECHNOLOGICAL AND
ORGANIZATIONAL PROGRESS
Schumpeterian Growth (Joseph
Schumpeter)
Increase in the stock of human knowledge which includes
- technological progress, and
- changes in institutions and organizational structures
which result in greater efficiency
The application of the new knowledge to production
processes which results in
production of given output with fewer resources
production of better products or new products

CONQUEST AND PLUNDER

Columbusian Growth
(Christopher Columbus)
Seizing the resources of weaker foreign
countries for ones exploitation

SCALE EFFECTS
Population growth makes specialization possible
Fixed cost expenditure (roads, canals, irrigation
works etc.) are worthwhile only if population
reaches a certain size
However, continuous growth in population will put
pressure on limited resources and lead to
Diminishing Returns and
increase in total GDP, but
decrease in per capita GDP

INTENSIVE GROWTH increase in per capita GDP

EXTENSIVE GROWTH increase in total GDP

Solovian Growth

SCALE
Schumpeterian Growth

Smithian Growth

EFFECT
Columbusian Growth

INVENTIONS
those that were purely empirical
(all inventions before the mid-nineteenth century)
those that depend on scientific knowledge

MICROINVENTIONS
small incremental steps that reduce costs,

improve functions and reduce energy and raw

materials needs etc.;
far more frequent, respond to prices and

incentives;
accounts for most gains in productivity .

MACROINVENTIONS
radical new ideas without precedent;
result from stroke of genius or luck

INVENTIONS AND INNOVATIONS

INVENTIONS
- depends largely on individual efforts

INNOVATIONS
(real-world applications of inventions)
depends on institutions and markets,

social and economic in nature

reduction of gap between best practice and average

technology (spread of best practice technology)

more relevant to economic history

THREE FACTORS BEHIND

SUCCESS OF INNOVATIONS
supply of ingenious and resourceful innovators
right incentive structure
diversity and tolerance

FRENCH ANNALES SCHOOL

( )
Breaks down the study of history into three
levels.

Environmental and ecological

History ( )
- focuses on the relationship between
humans and the environment;
- changes were slow and almost
imperceptible;
- deals with deep structures and the
long term;
- time was geographical time.

Economic, social and

cultural history ( )
- focuses on economic and social
structures, and cultures and civilizations;
- changes were slightly faster with
perceptible economic and
demographic cycles over generations
and centuries;
- deals with the medium term; time was
social time.

History of events ( )
- conventional political, diplomatic and
military history;
- changes were fastest and perceptible
to humans;
- deals with the short term; time
was individual time.
The history of events, the main subject of interest
in traditional history, was merely the surface
manifestations of the more basic but less visible
movements of structures and conjunctures.

Resounding events are often only momentary outbursts,

surface manifestations oflarger movements and explicable
only in terms of them.
Individuals, including apparently powerful kings, emperors and
dictators, were severely limited and constrained in what they
could achieve by broader and deeper structures beyond their
control.
In history, humans were prisoners of their physical environment
and their mental framework.

UNIVERSE OF ALL POSSIBLE DEVELOPMENT PATHS

Environmental and Ecological Constraints

Economic, Cultural and

Social Constraints

Human Agency

Dynamic rather than Static

Probabilistic rather than Deterministic

Geographic Determinism
Economic Determinism
Cultural Determinism

(Arnold Toynbee)
Challenges

Responses

Challenges

New
Equilibrium

Responses

New
Institutions

Path of Least
Resistance

Institutions are history specific and path dependent

Historical
Conjunctures

Environmental
and Ecological
Factors

Human Agency
(Institutions)

BRIEF OVERVIEW OF CHINA

AND EUROPE OVER DIFFERENT
PERIODS OF HISTORY

CHINESE DYNASTIES AND THEIR CORRESPONDING PERIODS IN EUROPE

221BCE 220CE

Chinese Dynasties

Corresponding Periods in Europe

Qin, Western Han, Eastern Han

Roman Republic, Roman Empire

220CE 589CE

Three Kingdoms,
West and East Jin,
Northern and Southern Dynasties

Eastern & Western Roman Empires,

beginning of Byzantium Empire

589CE 907CE

Sui and Tang Dynasties

Dark Ages

907CE 960CE

Five Dynasties, Ten Kingdoms

Middle Ages

960CE 1276CE

Northern and Southern Song

Middle Ages

1276CE 1368CE

Yuan

Middle Ages

1368CE 1644CE

Ming

Renaissance Period
(

1644CE 1911CE

Qing

Enlightenment Period
Industrial Revolution

HAN/ROME
Han

excelled in metallurgy
and agriculture

Rome excelled in construction

and transportation

TANG/EUROPE DARK AGES

Tang

two river empire

Europe wealthiest part was

Moslem Spain

SONG/ EUROPE MIDDLE AGES

Song - Intensive economic growth:

new varieties of rice

transportation
trade
specialization
technology

- Shift of center of gravity of empire

to the south
- Development of bureaucracy
Europe Middle Ages recovery from Dark Ages

MING-QING / RENAISSANCE
AND ENLIGHTENMENT PERIOD
IN EUROPE
Ming-Qing
extensive economic growth;
absence of intensive growth ???
Europe
both extensive and intensive
growth

COMPARISON BETWEEN THE

CHINESE ECONOMY AND
OTHER MAJOR ECONOMIES
IN HISTORY
PAUL BAIROCH
ANGUS MADDISON

PAUL BAIROCH
Before the Industrial Revolution, difference
in per capita income between the richest and
poorest traditional countries was in the range:
1.0 to 1.6
(excluding primitive societies, the poorest of
which had an income level of 30% below the
poorest traditional countries.)
Difference in per capita income between
broad economic entities like Europe and
China was in the range:
1.0 to 1.3

Micro-regions (with fewer than two million

inhabitants) could have higher income due
to exceptional factors :
- extremely fertile land
- favorable geographic location
- industrial specialization

In the pre-agricultural
revolution/
pre-industrial revolution era:
-

the value added per worker in industry did not

exceed that of agriculture by more than 100%

- the inter-regional disparities in agricultural

productivity probably did not exceed the ratio

1.0 to 3.0
- micro-regions specializing in international trade

could have an exceptionally high per capita income