Title: Chinese Economic Performance in the Long Run.
Author: Angus Maddison
Scope: 3 stars
Readability: 3.5 stars
My personal rating: 4 stars
See more on my book rating.

Topic of Book

Maddison overviews Chinese economic growth since the year 960.

Key Take-aways

• Between 960 and 1280, the Sung dynasty experienced tremendous population growth along with some increase in per capita income. This economic growth came to a halt sometime between the Mongol invasion and the early Ming dynasty.
• Afterwards, China stagnated economically, while Northwest Europe grew in per capita income, population and military power.
• Between 1700 and 1840, China’s population grew rapidly, but there was no increase in per capita income.
• Maoist period (1950-78) had disastrous political experiments that undermined sporadic economic growth.
• After the death of Mao, the party abandoned doctrinaire Communist economic policy and embraced trade with the world. This resulted in perhaps the greatest economic growth in world history.
• As China catches up to Western levels of per capita income, its economy will slow.

Important Quotes from Book

There have been six transformations in Chinese development which I managed to quantify:

i) Intensive and extensive growth in the Sung dynasty, 960-1280, when per capita income rose by a third and population almost doubled. In the eighth century three-quarters of the population lived in north China growing dry-land crops of wheat and millet. By the end of the thirteenth, three–quarters of the population lived south of the Yangtse, with a massive development of wet rice cultivation. There was also a significant opening to the world economy, which ended abruptly in the early Ming dynasty (1368–1644). China turned its back on the world economy, when its maritime technology was superior to that of Europe.

ii) After a long period of mediocre progress and episodic setbacks, population rose more than three–fold between 1700 and 1840 (much faster than in Europe and Japan), with no fall in per capita income. This extensive growth was possible because of accelerated use of dry-land crops from the Americas (maize, sweet potatoes, potatoes and peanuts), which could be grown in hilly, sandy and mountainous areas. There was a big expansion of the national territory and closer control of docile tributary states, but China remained isolated from the outside world and repudiated British efforts to establish diplomatic and commercial relations at the end of the eighteenth century.

iii) Because of technological backwardness and weakness of governance, China suffered from internal conflict and collusive foreign intrusions on its territory and sovereignty from 1840 to 1950. The economic results were disastrous. GDP fell from a third to a twentieth of the world total and per capita income fell in a period when it rose three-fold in Japan, four–fold in Europe and eight–fold in the United States.

iv) 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 Vietnam and long years of almost complete autarchy.

v) From 1978, China reversed Maoist policies and pursued 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. The opening to the world economy was a major driving force for economic growth. If Hong Kong is included, China is now the world’s biggest exporter.

vi) Catch-up will continue, but the pace of progress will slacken as China gets nearer to the technological frontier. Nevertheless, by 2030, the per capita GDP level should reach that of western Europe and Japan around 1990.

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 fertilizers. 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.

China’s economic advance in the Sung dynasty relied heavily on exploitation of once–for–all opportunities for switching to intensive rice agriculture and there is little convincing evidence for believing that China was on the brink of developing a mechanised industry.

Outside agriculture, China’s bureaucratic system hindered the emergence of an independent commercial and industrial bourgeoisie on the European pattern. The bureaucracy and gentry of imperial China were quintessential rent–seekers. Their legal and customary privileges defined their status, lifestyle and attitudes. They were the group that dominated urban life. They had a strong regulatory bias. Entrepreneurial activity was insecure in a framework where legal protection for private activity was exiguous. Any activity which promised to be lucrative was subject to bureaucratic squeeze. Larger undertakings were limited to state or publicly licensed monopolies. China’s merchants, bankers and traders did not have the city charters and legal protection which merchants had in European cities. International trade and intellectual contacts were severely restricted. This self–imposed isolation was also a barrier to growth.

For the last thirteen centuries of the Empire, Chinese rulers entrusted the administration of the country to a powerful bureaucracy. This educated elite, schooled in the Confucian classics, was the main instrument for imposing social and political order in a unitary state with twice the territory of Europe.

The Ming and Ch’ing kept titled nobility in check, without territorial fiefs, independent military or political jurisdictions. At a very early stage, the primogeniture system of inheritance was abolished. The aristocracy became a costly fossil, with its income derived mainly from imperial sinecures, dropping in rank with each successive generation. Landed aristocracy had already disappeared as a significant political force in the course of the Sung dynasty. Eunuchs and bondservants within the Imperial household influenced policies but posed no real threat to bureaucratic control.

Thus the competitive recruitment process for officials had two important side effects: a) it determined the nature and content of education; b) it greatly augmented the prestige attached to credentials and had a profound influence on social attitudes and social structure. Amongst the property–owning group, only the credentialed gentry had easy access to office holders.

There was no significant church hierarchy or doctrine to resist or counterbalance bureaucratic power after the important Buddhist properties were seized in the ninth century… It was a state cult whose local temples were maintained and whose rituals were carried out by the bureaucracy with an accommodatory rather than adversarial attitude towards other systems of belief.

The urban bourgeoisie (i.e. merchants, bankers, retailers, commodity brokers and shippers, entrepreneurs in industries such as textiles, clothing or food processing) were deferential to the bureaucracy and gentry and dependent on their good will. Although they had guilds and other associations to foster their interests, they did not have the city charters and legal protection which merchants had in European cities from the middle ages onwards.

The main emphasis was on texts which were already 1500 years old in the Sung dynasty. Thus the power of tradition and orthodoxy was reinforced and the intellectual authority of the official elite was difficult to challenge.

The institutions of such a far–flung bureaucracy reporting to and controlled by the central authority would not have been possible without the precocious development of paper and printing.

The bureaucratic system was the major force maintaining China as a unitary state. The bureaucracy was a docile instrument of the Emperor (as long as he did not seriously breach the mandate of heaven), but exercised autocratic power over the population, with no challenge from a landed aristocracy, an established church, a judiciary, dissident intellectuals, the military or the urban bourgeoisie. They used a written language common to all of China and the official Confucian ideology was deeply ingrained in the education system. This system was relatively efficient and cheap to operate compared with the multilayered structure of governance in pre–modern Europe and Japan. It facilitated central control by maintaining an efficient communications network and flow of information which enabled the imperial power to monitor and react to events. It maintained order without massive use of military force.

The economic impact of bureaucracy was generally very positive in agriculture. Like eighteenth century French physiocrats, the Emperor and bureaucracy thought of it as the key sector from which they could “squeeze” a surplus in the form of taxes and compulsory levies. They nurtured agriculture through hydraulic works. They helped develop and diffuse new seeds and crops by technical advice. They settled farmers in promising new regions. They developed a public granary system to ensure imperial food supplies and mitigate famines. They commissioned and distributed agricultural handbooks, calendars etc.

Outside agriculture, the bureaucratic system had negative effects. The bureaucracy and gentry were quintessential rent–seekers. Their legal and customary privileges defined their status, lifestyle and attitudes. They were the group which dominated urban life. They prevented the emergence of an independent commercial and industrial bourgeoisie on the European pattern. Entrepreneurial activity was insecure in a framework where legal protection for private activity was exiguous. Any activity that promised to be lucrative was subject to bureaucratic squeeze. Larger undertakings were limited to the state or to publicly licensed monopolies. Potentially profitable activity in opening up world trade by exploiting China’s sophisticated shipbuilding and navigational knowledge was simply forbidden.

The other feature of this bureaucratic civilization, which had long–term repercussions on economic development, was the official Confucian ideology and education system. By comparison with the situation in Europe in the middle ages, its pragmatic bias gave it the advantage. The official orthodoxy was probably most benign during the Sung dynasty. Educational opportunity was widened by state schools which provided a broader curriculum than the bureaucratic academies in later dynasties.

China failed to react adequately to the Western challenge until the middle of the twentieth century, mainly because the ideology, mindset and education system of the bureaucracy promoted an ethnocentric outlook, which was indifferent to developments outside China. There were Jesuit scholars in Peking for nearly two centuries; some of them like Ricci, Schall and Verbiest had intimate contact with ruling circles, but there was little curiosity amongst the Chinese elite about intellectual or scientific development in the West.

Balazs (1931, p. 20) estimates the population South of the Yangtse to have been 24 per cent of the total in the early T’ang (around 750). Durand (1974), p. 15, shows 60 per cent living there at the end of the 12th century. Elvin (1973, p. 204) suggests that more than 85 per cent lived in south China at the end of the 13th. Large parts of south China had been relatively underdeveloped. Primitive slash and burn agriculture and moving cultivation had been practiced.

Between the Sung and the Ming dynasty, China moved to a system where production and managerial decisions in agriculture were made by peasant proprietors and tenants, who could buy and sell land quite readily and sell their products on local markets.

Because of climate and topography (large areas of mountain and desert), the proportion of land suitable for crop production is unusually small by international standards. China is a country of ancient settlement, but at the end of the twentieth century, cultivated land was only 10 per cent of the total area, not very different from the situation in countries of recent settlement and in stark contrast to India which is able to cultivate more than half its total area, or Europe where the proportion is more than a quarter… The Chinese man/land ratio is extreme. For every person engaged in farming, there is only one–third of a hectare of cultivated land, compared with 99 hectares in the United States.

For the past millennium, Chinese have eaten less meat than medieval or modern Europeans, milk is not consumed by adults and there has been an almost total absence of milk products. The concentration on crop products was influenced by land scarcity.

A third feature of Chinese agriculture has been heavy use of manure.

Chinese agriculture is heavily dependent on irrigation and careful water management.

Another feature of Chinese agriculture was its centrality in economic policy.

From early times Chinese farmers succeeded in getting higher yields from their seeds than Europeans.

With official encouragement, early ripening seeds were developed which eventually permitted double or even triple cropping of rice. Until the beginning of the eleventh century, the total time for rice to mature was at least 180 days (4 to 6 weeks in a nursery bed and 150 days to mature after transplanting). The Sung emperor Chen–Tsung (998–1022) introduced early ripening and drought resistant Champa rice from Vietnam. Over time, this made double cropping feasible and allowed extension of cultivation to higher land and hillier slopes. The original Champa rice matured 100 days after transplanting. By the fifteenth century there were 60–day varieties. In the sixteenth century 50–day varieties were developed, in the eighteenth a 40–day variety and in the early nineteenth a 30–day variety became available.

If one compares the de Vries estimates with those of Rozman, it is clear that there was a very different situation in China and Europe. In the T’ang period China had an urban civilisation and Europe had none. By 1820 the Chinese degree of urbanisation was not much greater than it had been a thousand years earlier, whereas European urbanisation made a great leap forward from 1000 to 1500 and by the latter date was more urbanised than mid–Ming China. By 1800 the European urban proportion had almost doubled from the 1500 level, whereas China in 1820 had the same proportion as in 1500.

Imperial officialdom was of great importance in Chinese cities, not only as a proportion of population, but also in terms of power. Officialdom had a powerful role in dictating the layout of cities, it controlled communications and was not challenged by a countervailing judicial, military, aristocratic or ecclesiastical power. Their clerks and runners were locally recruited and responsible for detailed fiscal demands, for economic regulation and exaction of penalties for crimes and misdemeanours. They had considerable power to vary these and to augment their income by dispensing favours, so the rest of the populace was in a state of dependency. The Chinese non–bureaucratic elite tended to mimic the habits and education of officialdom and were dependent on official favours to lighten their tax burdens and get other legal privileges like immunity from corporal punishment for criminal offences. They were also eager to purchase official degree status on those occasions in imperial history when fiscal need led the government to raise money this way.

In bigger industrial enterprises, the state usually played a leading role (e.g in state iron works, imperial porcelain works, in licensing the salt trade, in control of land for urban real estate, control of communications and trade on the Grand Canal).