China's Comeback

During the first week of the Beijing Olympics an op-ed of mine regarding China's 21st century resurgence was published in the Boston Globe, International Herald Tribune, and Straits Times (Singapore) . I was on vacation by then. When I got back, I found in my inbox a skeptical response from a reader to my claim that the Opium Wars set into motion China's decline:

"Most historians are of the opinion that China started to go downhill when admiral Cheng Ho disappeared into obscurity and with the death of emperor Yongle in 1424, Ming vitality ended. It became a capital offense to build a seagoing junk with more than 2 masts.The last of the Ming emperors were to quote a learned Chinese scholar flaccid incompetents. So they guaranteed the isolation of the Middle Kingdom, Peking was physically and mentally landlocked."

Interesting observations. I'll leave aside the bit about Ming emperors being flaccid incompetents (a bit ironic in the context of this comment since the lionized admiral Cheng Ho was a eunuch.) But the notion that Ming emperors may have been innovators in misguided regulations with disastrous and unintended consequences is an interesting one.

(The same reader also questions the claim in the op-ed that China comprised 30%+ of world economic output as late as 1830. The source for that claim is Angus Maddison's seminal study for the OECD of the world economy during the last millennium. A fascinating read.)

A really interesting follow-up line of inquiry goes as follows: "So what if China accounted for about a third of world GDP for the last century. They also accounted for more or less a third of world population. But in the networked, winner-take-all economy of the 21st century, population is not ultimately going to be the determinant of economic performance."

Along these lines, endogenous growth theorists spent the second half of the 1990s trying to adjust the dominant lines of theory so they wouldn't suggest that bigger economies would grow faster. (See update on this debate here.) Now, of course, the rate of growth of GDP is not the same as its level. But the endogenous growth debates of the end of the last century point to an interesting question for the start of this one: Will the 2100 "steady state" for China's share of the world economy be
(1) back at its historical level of ~30% (up from a bit more than 5% today);
(2) down to the 1% that it was in 1979 (better get good odds on that one); or
(3) closer to today's level than to the historical norm for the last millennium?

Assuming no bans on seagoing junks with more than 2 masts or their modern equivalent (big assumption), I'd go with (1).