China: A weighty issue?

Much time and effort has been devoted to under- standing the recent rise of China as a major global economic power. It is, however, important to also note that China (or at least the precursor territories making up modern China) was the largest single economy in the world until the late 1800s and had been so for several hundred years. This isn’t surprising, as people have lived a subsistence or agrarian existence with fairly low output per capita for most of human history. Countries with larger populations would therefore have had larger economies. This changed permanently with the advent of the industrial revolution and the advancement of technology, in particular. First the Western European nations, then a rapidly-growing United States (US), came to dominate the world economy thanks to massive gains in technology-enabled productivity.

China underwent substantial transformation during this period. Military defeats to Britain in the Opium Wars (which led to the ceding of Hong Kong to Britain) were followed by partial colonial occupation by Japan, a civil war leading to communist control of “mainland” China and the fleeing of the nationalist government to the island of Taiwan in the aftermath of World War. Following this period, communist mainland China stagnated economically until around 1980. At that point, China accounted for less than 5% of world GDP (despite the country making up 22% of the world population at the time) and the average person was extremely poor relative to someone living in the West (per capita GDP was a mere 1.5% of the average American). Unprecedented sustained economic growth since then means that China is now a middle income country and, because of its large population, is the second largest economy in the world; the largest if you use purchasing power parity.

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