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Last Updated: Thursday, 10 March 2005, 23:38 GMT
China's magnificent historic past

By Evan Davies
BBC Economics editor

Coloured glaze tile kiln in Liuliqu Village near Beijing,
China's industrial heritage stretches back thousands of years

Ask most British school children who invented printing, and they will say William Caxton.

Ask most continental Europeans, and they will say Johannes Gutenberg.

Both are wrong: it was of course Bi Sheng, during the Song Dynasty, between 1041 and 1048.

It's easy to overlook it, but China does have a long and illustrious past.

The country has usually been a rather bigger player in the global economy than it is today.

Two thousand years ago, it produced a quarter of total world output.

A thousand years ago, it produced almost a quarter of world output.

And in 1820, it produced a third of the world's output.

China's relatively poor performance of the last two centuries has been an historical aberration, with the country falling behind Europe which learned to industrialize and develop quickly.

Unreliable data

I can say all this with authority thanks to a fantastic publication called The World Economy: Historical Statistics, published by the OECD in Paris and based on the detailed scholarship of the world expert on historical economic data Angus Maddison.

TV factory in China in 1980
In 1980, China introduced western-style industrialisation to get rich quick

One shouldn't read the book in the belief the statistics are accurate to 12 decimal places.

(Economist Roger Bootle likes to joke that you can't get good quarterly data, seasonally adjusted, going back 2,000 years.)

But what you can get is a clear picture that roughly speaking, the size of China's economy normally reflects its size of population.

As the country has approximately a fifth of the world population, there is little reason not to expect it to have a fifth of the world economy.

Get rich quick

During the twentieth century, though, China was batting well below its weight.

Chinese bicycle production
The Chinese are keen to move from bicycles to cars

In 1950, before Mao had a chance to reform it, China was producing below five per cent of world output.

In 1973, after Mao had a chance to reform it, China was still producing below 5% of world output.

What has been going on since 1980 is China deciding that "if you can't beat them, join them", and embarking on the well trodden path of western-style industrialisation to get rich quick.

According to Angus Maddison's careful statistical collation, the strategy is working pretty well.

Rising income

Today China is probably a little below 15% of the world economy.

This has been an unprecedented boon to Chinese incomes.

In the year 1AD, the per capita income of China was $450, (in 1990 prices).

In 1950, the per capita income was more or less the same ($439 in 1990 prices).

By 2001, that had risen to $3,583.

In other words, the growth in living standards in the two decades after market reforms in China were launched, is greater than the cumulative progress in the previous two millennia.

From bicycles to cars

But for all this, China has a lot of potential for further progress.

There are still huge hinterlands which have yet to industrialise.

One company executive in the mid-west of the country, well away from the industrial east coast, told me that he thought the country was only a third of the way down the road.

And to make the same point, one of his employees told me, "we used to have bicycles, now we have mopeds -- hopefully we'll soon have cars".

Judging by other countries that have followed this strategy, like Japan and South Korea, the Chinese will get their cars as the economy moves down the remaining two-thirds of the journey.

And China's economy will carry on growing fast it catches up with its neighbours, who themselves will probably grow as well.

And in a generation or two, there is no reason to suppose China will not be 20% of the world economy; normal service will have been resumed.



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