Figure 1.--Here we see Chinese children in Liaoyang, Manchuria, located north of the peninsula jutting into the bay system leading to the Yellow Sea. Liaoyang is one of many cities in China of over a million people. It is a commercial and industrial center. Its strategic location made it the scene of the outbreak of the Russo-Japanese War (1904-05) as the two countries struggled to control Manchuria and Korea. Communist China at the time this photograph was taken was one of the poorest countrues in the world. Pictured here are the children of injdustrial workers. The wiorkers were some of the poorest paid in the world, but peasants in the countryside were even less well off. This photograph was taken in 1978, the same year Chairman Deng went to Singapore and began to set the Chinese Economic Miracle in progress by introducing capitalism. The press caption read, "China in 1978: In 1978 contrasts have sharpened between traditional China and ultra-modern industrialized China. It is impossible ... " Unfortunately the full caption is impossible to read. Notice the reference to Chinese industry as 'ultra modern'. This comes from a clueless French photographic agency (SYGMA) with photographers and managers growing up in a socialist-oriented society that have not idea about productivity and industrial quality. The fact from this pount China veered capitalist and Franbce veered socilist explains the economic trajectory of the two countries. Click ob the image if you want to try to figure out the text. There is a Spanish and French version. The photographer is the same paparazi photographer, James Andanson, who is believed to have secretly taken explosive photos of the Paris crash scene where Princess Diana was killed. Photogrpher: James Andanson.

There have been many huge swings in the Chinese economy affecting not only China, but the entire world. Civilization did not begin in China, that occured in Mesopotamia a few millennia before China. Once China unified it developed what was to become not only the strongest ecomomy Asia, but the world. As in in all countries there were economic ups and downs as in all societies, but China emerged as the wealthiest country on earth. Ancient China economically dominated most of Asia up to the Himilayas. The agricultural revolution and the birth of civilization occurred first in the Middle East. This occured later in China, but entirely independently. While the last of the four great river valley civilizations to develop, but it developed the most efficient agricultural economy. And until very modern times, agriculture was the most important economic sector which supported the great bulk of the population. Technological advances meant that Chinese agriculture was more advanced than European agriculture. These trechnical advances began in ancient times and continued into the medieval era. Marco Polo was famously astonished at what he found in China during his travels. China was not only rich, it was the world center of technology and innovation. Much of the technology that led Eyurope out of the medievsl era originated in China. China even with its wealth and technology, did not develop modernity. This occured in the West. Chinese technology never develped into science. Nor did the Chinese develop capitalism and democracy. The industrial revolution occurred in the West. China's traditionl society resisted change. Traditional agriculkture and the lsck of indistry meant that China with low productivity coukdnoit comete with the est. This led to the Unequal Treaties, European controlled ports, and national humiliation. Eventually much of the country was cinquered by Japan and subjected to a brutal occuption. When change came it was totalitarian Communism. But in contrast to the optimistic expectations of committed Communists, they were not able to develop a modern economy. Rather than prosperity mAo, in the Great Leap Forward engineered disaster and a devestaing famine. As long as Mao was in chsarge, asking questions resulted in arrest or death. After the Cultural Revolution and Mao's death, Chinese leaders began asking questions. Chairman Deng Xiaoping on a visit to prosperous Singapore, Deng asked the architect of the country's prosperity, Lee Kuan Yew, how he had been so successful. The answer was capitalism. Deng did not use the term, but the capitalism he introdyced in only a few years turned the counhtry inhto an economic powerhouse.

Ancient China

Ancient China economically dominated most of Asia up to the Himilayas. The agricultural revolution and the birth of civilization occurred first in the Middle East. This occured later in China, but entirely independently. While the last of the four great river valley civilizations to develop, but it developed the most efficient agricultural economy. And until very modern times, agriculture was the most important economic sector which supported the great bulk of the population. Technological advances meant that Chinese agriculture was more advanced than European agriculture. These trechnical advances began in ancient times and continued into the medieval era. Until China's free market reforms (1990s) we tended to think about the vast and poor Chinese peasant masses. In fact, until the 18th or even the 19th century, the Chinese were bettr fed and better off than most Europeans. (An exception here was the American colonits.) This is why China developed such a rich and successful society whixch spawned a steady stream od artistic treasures and technological advances.

Medieval Era

The medieval era is not just a western construct. It lasted almost a millenia in the West, from the fall of Rome (5th century AD) to the the Reformation (16th century). The actual end of the medieval wea is difficult to define and varied in different regions of Europe. During the Medieval era, the economic gap between China and the west actually increased, especially during the early medieval era, somrtimes called the Dark ages. The circumstances that led to the Medieval European era also affected other areas of the Euro-Asian core, although in different ways and a dofferent time line. In China there was no Dark Age in the Western sense. In fact what technological progress made during this period was primarily made in China and gradually flowed west. Trade with the West at first continued over the Silk Road. This trade was interupted by the rise of Isam, but the Mongols actually stimulated movement along the Silk Road. It never entirely stopped, but after the Mongols Chinese goods became more expensive in the West because access was controlled by the Ottoman Turks and Arabs.. This affected the volume of trade and stimulated a desire in Western Eutope to find a sea route, eliminating the middlemen, especially the Venetians, Ottoman Turks, and Arabs.

Industrial Rvolution in the West (mid-18th Century)

The Industrual Revoklution began in Britain (mid-18th century). One of the interesting questions in economics is why China which throughout the medieval era led Europe technologically did not lauch the industrial revolution. Many of the important technological innovations that fed into the industrial revolution began in China. Marco Polo was astonished by riches and tecnological level of Chinas. European navigators sought routes to China because it was so much richer than Europe with products highly coveted in Europe. In fact, the Europeans often did not have products to offer the Chinese that they wanted. It was the huge output of silver from Spanish American mines (Mexico and Peru) that helped finance trade with China. But it was in Europe that modern science emerged along with capitalism and the industrial revolution.

Colonial Era

China was never colonized by the West, but it was powefully affected by the European powers, but not at first. The whole purpose of the West's maritime outreach was to reach the East, epecially China. China at the time was the world's largest and most prosperous country (16th cebntury). Products like porselin and sikk were highly prized in the West. The first Western traders reached China during Ming Dynasty. A period of political instability began caused by wars resulting in the overthrow of the Ming (1640s). Qing (Manchu) Dynasty gained control of China. They entered Beijing (1644). It took longer to seize contol of the south, several decades in fact. It was a time of great suffering in China (1640s-50s). There are reports of starvation and epedemics which affected the population. It was during the Qing Dynasty that foreign food crops like the potato and corn were introduced on a large scale in China (especially during the 18th century). These new crops and the bountiful crops they producd as well the peace of Qing rule resulted in a substantial increase in population. China's popultion during the Ming was something like 150�200 million, but this grew to more than 400 million during the Qing era. [Fairbank, p. 191.] Markets expanded with the growth of population (18th century). The Qing reduced taxation levels helping to expand market activity. The Corv�e system was replaced with a head tax used to hire workers. China continued to export tea, silk, porcelin and other manufactures goods. Western merchants struggled to find products they could sell to the Chinese. Western silver helped settle the adverse trade balance. [Murphey, p. 151.] A major difference between Ming and Qing economic policy was that the Qing involved itself significantly in the economy. interfered greatly in the economy. As a result of the Industrial Revolution in Europe, by the 19th century China had declined to a backward country unable to defend itself from more technicall advanced foreign powers. China was nevcer converted to a colony. The Europeans generally confined their commercial activities to coastal cities. While not a colony, the combination of coastal enclaves and unequal treatries converted China to a kind of colonial dependency.

Nationalist China (1912-49)

Nationalist overthrew the Qing Dynasty (1912). The new Government, however, was unable to establish control over large areas of the country. It was Chang Kai-sheck who finally established control over the country (mid-1920s), but a civil war dveloped with the Communists. The Nationalists ended The Treaty Port system, except for Shanghai and Hong Kong. It proved to be the Japabese and not the Europeanhs who funally decided to cilonize China. After subduing Manchuria (Manchukuo), the Japanese converted a minor incident at the Marco Polo Bridge into the China Incident (1937), really a war with China. The Japanese drove into the heart of China in an effort to convert it into a colonial depedency providing a stable market and raw materials (1937). The Nationaluists resisted the Japanese who incredibly decided that the quickest way to end the draining war in China was to attack the Americans and British. The Nationlists continued to resist the Japanese, but the draconian measures taken to obtain resources from the peasantry alienhtated them and paved the way for the Cimmunist victory in the Civil war.

Communist Planned Economy (1949-78)

A domestic struggle developed in China before the Japanese invaded. The Nationalists and Communists struggled to control the vast country. The Communist victory achieved by Mao Tse-tung (1949) condemned China to four decades of economic failure and one of the worst famines in Chinese history, in terms of fatalities surely the worst. After Japanee occuoation, Workd War II, and the Civil War, the Chinese economy had little where to go, but up. The inherent falacies of Communist economics, however, did not take long to adversely affect the Chinese people. Mao like most Communists was a true believer. He thought that Communism was a scientifically derived system for improving human society and econimic production. So he put his ideas into actual practice--the Great Leap Forward. Mao's Great Leap Forward proved to be a disaster both in economic terms and causing a deadly famine. It was such a disaster that some of the Communist Party ledership begn to question Mao. The Great Leap Forward was followed by the equally disatrous Cultural Revolution setting China back a generation. The Cultural Revolution was Mao's attempt to purge the Party of his growing number of critics. The Cultural Revolution ruined both lives and stilted economic activity. As in other countries, communism in China acted primarily to limit real economic growth and wealth creation. The Communists were convinced that economic planning must prove more efficent that the chaotic operations of the free market. Many were shocked to learn as did the Soviets to the north that central planning not only was less efficent than the free market, but actually retarded economic development and wealth creation.

Free Market Reforms (1978- )

Deng Xiaoping who survived the Cultural Revolution was a committed Communist. Mant of those who criticized Mao and were denounced were not so lucky. Denf of course came to power after the Cultural Revolution. He truly believd that Communism was a scientifically proven system for improving human society. But he ws not irational. He compared China's backwardness and poverty after three decades of Communism to the rapid economic progress of the Asian Tigers (Sinapore, South Korea, and Taiwan). In a state visit to Singappre, he discussed this with President Lee Kuan Yew. This was the beginning of the market reforms that totally remade the economy of China in three decades. The free market economic reforms of Deng Xiaoping and engagement with the West (1980s) has brought about an economic revolution that at long last is unleasing the economic energy of the Chinese people. Never before in the history of the world have so many people emerged from poverty in such ahort period of time. The rate of growth has been stunning, especially compared to the economic stagnation and decline during the Communist era. And it is all due to the potent force of free market capitalism. It is notable the differences that developed between China and Russia overv this period. The Chinese under Deng chose capitalism. The Russians under Putin chose ultra-nationalist kleptocracy. There are many questions about the Chinese economy which are difficult to assess in a closed system. There are concerns about highlybindebted state banks, masive overbuilding, and heavily polluted cities. Neighboring countries are concrned bout increasingly aggressive behvior, especially clims to large areas of potentially oil rich areas of the South China Sea far away from the Chinese coast. A major unanswered question about China is if capitalism can proper under a system of political dictatorship.

Sources

Fairbank, John K. "The Canton trade and the Opium War", in Fairbank, John K. (ed.), Late Ch'ing 1800�1911 Part 1, The Cambridge History of China Vol. 10 (Cambridge: Cambridge University Press, 1978), pp. 163�213.

Murphey. (2007).

Created: 7:04 PM 6/20/2018
Last updated: 7:04 PM 6/20/2018