In light of my recent
contributions on China’s economic performance which have appeared in The
Hill and on the Fraser
Institute Blog, I thought it might be useful to provide the figures which
underpin the longer-term analysis of their performance. The data I used is from the Angus
Maddison Database – the 2018 update – and the data is summarized in the
accompanying Figures 1 and 2.
Figure 1 plots total
real GDP from 1820 to 2016 in 2011 USD for the United States, the United Kingdom
and China. In 1820, China had a vastly
larger economy than either the US or the UK with a real GDP of $325 billion compared
to $69 billion for the UK or $21 billion for the USA. Indeed, for much of economic history, China
has always been the biggest economy in the world as a result of its massive
population. In 1820, China had a
population of 381 million people compared to 10 million for the United States
and 21 million for the UK. However, the
19th century was not kind to China and by 1870, China’s economy had
shrunk to $270 billion but it was still larger than the United States at $150
billion and the UK at $179 billion.
Total GDP of both the
US and the UK grew quickly as a result of late nineteenth century
industrialization with the US matching the UK in 1878 and then pulling ahead in
terms of total GDP. By 1887, the US economy
at $306 billion was larger than China at $274 billion and the UK at $228
billion. By the eve of the First World War
in 1913, the US economy at $791 billion was nearly twice the size of both the
UK and China at $368 billion and $344 billion respectively. In the period since
WWI, the United States grew rapidly and by the mid 1970s was over five times
the size of the UK economy and about five times larger than China’s economy.
China had a Communist
revolution in 1949 but economic performance in its aftermath - while substantial - was not as
robust when compared to the last forty years.
From 1950 to 1975, China real GDP grows from $348 billion to $1.2
trillion – a tripling of output. However,
things for China really take off with the first economic reforms and liberalization
of the 1970s and from 1975 to 2016, its economy expands from $1.2 trillion to
$17.3 trillion. Over the 1975 to 2016
period, the US economy expanded from $5.6 trillion to 17.2 trillion while the
UK expanded from $1 trillion to $2.5 trillion.
In 2016, China
re-assumed its historical role as the world’s largest economy. Yet, as I pointed out in my oped pieces, this
is not the end of the story. Despite its
impressive and rapid economic growth in terms of total output, China still lags
when it comes to per capita output. As Figure 2 shows, over the entire 1820 to
2016 period, China has always had a lower per capita GDP than either the UK or
the US and the relative gap has not changed all that much despite the rapid
growth of the last 40 years. In 1820, per
capita GDP in China was about 26 percent that of the UK and 41 percent that of
the USA. By 1975, its per capita GDP was
7 percent that of the UK and 5 percent that of the United States. After the robust growth of the post 1975
period, by 2016 per capita Chinese GDP now stands at 34 percent that of the UK
and 24 percent that of the US.
So, China has done
very well but it still has a long way to go.
Its rapid extensive growth masks the fact that large swaths of its
population are still quite poor. Its
economy is showing signs of economic
and political fragility given its aging population, large debt levels and
economic inequality and this has global
implications. Such fragility is probably
a reason for its more authoritarian turn in recent years under President Xi Jinping. After the rapid growth and improvement in
living standards of the last few decades, any economic slowdown may create a
politically volatile domestic mix of discontent.