Six Transformations in China 960-2030 AD

A forthcoming speech of Angus Maddison at ADBI;

1.) Intensive and extensive growth in the Sung dynasty 960-1280, when per capita income rose by a third and population almost doubled. There was a major shift in the centre of gravity of the economy. In the eighth century three-quarters of the population lived in North China, where the main crops were wheat and millet. By the end of the thirteenth, three-quarters lived south of the Yangtze. This area had been swampy and lightly-settled, but with irrigation and early ripening seeds, it provided an ideal opportunity for massive development of rice cultivation. There was also a significant opening to the world economy in the southern Sung, Yuan and early Ming dynasties (1130 to 1433), which ended abruptly when China withdrew, at a time when its maritime technology was superior to that of Europe.

2.) After a long period of mediocre progress and episodic setbacks, the second transformation occurred between 1700 and 1820, when population rose nearly threefold (much faster than in Europe and Japan), with no fall in per capita income. This achievement was possible because of accelerated use of dry-land crops from the Americas (maize, sweet potatoes, Irish potatoes and peanuts), which could be grown in hilly, sandy and mountainous areas. There was also a huge expansion of the national territory and closer control of docile tributary states. China remained isolated from the outside world and repudiated British efforts to establish relations at the end of the eighteenth century.

3.) Because of technological backwardness, and weakness of governance, there was a third transformation from 1840 to 1950. China suffered from internal conflict and collusive foreign intrusions on its territory and sovereignty. The economic results were disastrous. Chinese GDP fell from a third to a twentieth of the world total, and per capita income fell in a period when it rose threefold in Japan, fourfold in Europe and eightfold in the USA.

4.) The fourth transformation in the Maoist period (1950-78), saw a significant recovery of per capita income, but growth was interrupted by disastrous economic and social experiments, wars with Korea, India and Viet Nam, and long years of almost complete autarchy.

5.) In the fifth transformation (1978-2003), China reversed the Maoist policies and adopted a pragmatic reformism which was successful in sparking off growth much faster than in all other parts of the world economy. There were large, once-for-all, gains in efficiency in agriculture, an explosive expansion of foreign trade and accelerated absorption of foreign technology through large-scale foreign direct investment.

6.) In the sixth transformation (2003-2030), catch-up will continue, but the pace of progress will slacken as China gets nearer to the technological frontier. Maddison has assumed that per capita income will grow at an average rate of 4.5 per cent a year between 2003 and 2030, but that the rate of advance will taper off over the period. Specifically, he assumes a rate of 5.6 per cent a year to 2010, 4.6 percent between 2010 and 2020, and a little more than 3.6 per cent a year from 2020 to 2030. By then, it will have reached the per capita level of western Europe and Japan around 1990. As it approaches this level, technical advance will be more costly as imitation is replaced by innovation. China will overtake the USA as number one economy in terms of GDP, will produce nearly a quarter of world GDP by 2030. Its geopolitical leverage will certainly be greater then than now.