Excerpt
Table of Content
1. Introduction
2. Economic Development in China until the 14th Century
3. Reasons for the Chinese Stagnation after the 14th Century
3.1 Elvin’s High-Level Equilibrium Trap
3.2 Pomeranz’s Reasoning
4. Evaluation of the Theories
5. Conclusion
References
1. Introduction
The industrial revolution in Europe, or more precisely, in Britain changed the global economy substantially. Major changes in agriculture, manufacturing, mining and transport through technological innovations led to a shift of global economic dominance from China to Europe between the 18th and 19th century. Until that point, China has been the largest and most efficient market-economy in the world, leading in agriculture, transportation and innovations. Every major contribution that led to the industrial revolution in Europe was also prevalent in China, but still the country did not do the next step forward and was overhauled by Britain quickly.
The objective of this paper is to examine the reasons why an industrial revolution did not occur in China during the Ming/Qing period, although it was the leading economy in the world. Therefore, the first section will shortly outline the economic development of China before the 14th century. Thereafter, two different theories about the reasons for China’s stagnation will be explained, before a critical evaluation of both theories will be provided. Last, a conclusion will summarize the main findings of this paper and give an outlook on future debates.
2. Economic Development in China until the 14th Century
The first roots of commerce in China date back to the Han Dynasty (206 B.C. - 220 A.D.). Historic records reveal the existence of markets which were mainly used to supply the upper class with goods. The government imposed taxes through which new industries and trade could be created. The sole supply of goods for the upper class started to change during the late Tang Dynasty (618 - 907) when government control slackened and the Chinese rural economy was increasingly linked with market mechanisms. As a result, trade activities increased and markets were no longer just supplier of luxury goods, but also of necessities. In addition, the markets were interlinked on a national level which is documented by a national internal customs network and a sales tax imposed by the government. Thus, the Tang Dynasty can be seen as the earliest form of a market economy in China.
Starting in the late 8th century, the medieval economic revolution constitutes a milestone in the Chinese economic history. Most revolutionary happenings occurred during the Sung and Yuan Dynasties (960 -1279: Sung, 1271 - 1368: Yuan). Characteristics of the revolution were the growth of large private estates or manors and the rise of tenant-serf relationships whereas the provision of defense was still in central government’s hands. Agricultural products were provided by the tenants to the capital in exchange for the protection by the country’s military. This is what made Chinese manorialism so different to the European feudalism. Whereas Europe’s feudalism was a fragmented political construct, the Chinese system was under the consolidated state control. In this system, the army grew very fast and the production of pig iron multiplied several times. Furthermore, the burden of administration was reduced for the manors as the system facilitated the control of the population and made an increased efficiency of the economy as well as the armed forces possible.
Another characteristic of the revolution was an upswing in agricultural productivity through the movement of population from the northern part of China to the southern part where rice-growing areas were quite deployed. Several developments in the agricultural technology such as a well-developed hydraulic technology made China to the most sophisticated agriculture in the world in the 13th century. Major improvements in water transportation techniques and (foreign) trade were also achievements during the Sung and Yuan Dynasties. Maritime trade contributed much to the national income at that time. The increased density and efficiency in trade and transportation led to a growing interdependency between the Chinese economies and an increasing specialization of production. Hence, China developed a system that had already many characteristics of a market economy. Subsequently, paper money was introduced as a currency and was spread to whole China in the 12th century and entirely backed by either silver or gold as a reserve.
Compared to Europe, that was still in the recovery from the Dark Ages at that time, China was superior in terms of intensive as well as extensive economic growth and also in its innovations. Just a few examples for Chinese innovations in science and technology are “[g]unpowder, the magnetic compass, and paper and printing, which Francis Bacon considered as the three most important inventions facilitating the West’s transformation from the Dark Ages to the modern world” (Lin, 1995, p. 270). China successfully combined Solovian, Smithian, Schumpeterian and economies of scale growth, i.e. the country increased the output per capita, the exchanges of goods, services, labor and capital (specialization), the stock of human knowledge including technological progress and therefore achieved scale effects in terms of a growing population and decreasing fixed cost expenditure (Leung, 2009). The latter can be seen in China’s rapid urbanization through which its cities flourished until the 19th century: “Nowhere in the world of 1800 was the hierarchy of urban central places so maturely developed as in the more advanced parts of China” (Elvin, 1973, p.318).
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