China Overtakes U.S. As World Largest Economy, And What We Should Learn From It
By the end of this year, China will probably become the world’s largest economy. In 2005 the size of China’s economy was only 43% of the United States’; but within just six years, the Chinese economy expanded so much that in 2011 it reached 87% of the US economy (note).
Economists thought that China would have surpassed the US by 2019, but the Middle Kingdom has once again surprised everyone by ending over a century of American economic supremacy earlier than expected.
China’s GDP growth has been indeed remarkable. Many people argue that the country’s ascendancy to the top of the world is not a novelty, but just the natural return to a world balance that had existed throughout much of the history of human kind.
In the 18th century, China, India and Europe were at roughly the same level of economic development. Each of these three economic blocs had a similar share of the world’s GDP, around 23%. In 1700, they amounted to 70% of all economic activity of the globe. China was at that time a major centre of manufacturing: it produced 33% of all manufactured goods, while Europe and India had a slightly inferior share, 23% each.
|Emperor Qianlong (乾隆帝, 1711-1799). During his reign, the first British mission under Lord Macartney was dispatched to China (1792-94). The mission became the first major diplomatic incident between the two countries. At that time, China was the world’s largest economy and it rejected British trade proposals. In an edict to King George III, Emperor Qianlong stated: ” Our
There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce” (source: Wikipedia)
|Shenzhen is a symbol of China’s
success. A small undeveloped town
of 314,000 people in 1979, it is now
a huge manufacturing centre with
a population exceeding 10 million
In 2011, however, the US accounted for 17.1%, the UK for 2.4%, and China for 14.9% of world GDP. Meanwhile, India’s economy has reached 6.4% of GDP (note).
Many Western observers seem to hold the view that this relative decline of the West is inevitable, and that it doesn’t matter since the share of world GDP doesn’t say much about a country’s standard of living. However, I believe that, not unlike Victorian Britain, Western countries are sinking into an age of defeatism and blindness. It is true that Britain has seen a betterment of its per capita income and standard of living since the era in which it was the world’s number one. It is also true, however, that Britain was ruined by two world wars which it would have lost without the help of the US. Given to Britain’s industrial decline since the end of the 19th century, it no longer had the manufacturing capacity to win a long conflict against a powerful industrial nation such as Germany.
It is also true that while the average Chinese can hope for a better life and a higher income (since they started from a low point one or two generations ago), most Western countries, including the US and Britain, are worse off than they used to be a few decades ago. The middle class is eroding, manufacturing has declined, finding a stable job with a good pay is hard, and starting a family is a luxury not everybody can afford (note; note 2).
Though it is true that it doesn’t matter whether China is number 1, it does matter if we in the West do not learn to be less ideological. For decades, the myth of the harmonious market propagated by neoliberal groups has hindered every democratic discussion about what we can learn from the East Asian experience and from the Golden Age of Western capitalism (1950-1970). We should neither fear nor envy China. But we must be humble enough to learn from it and to use its own methods whenever they can benefit us.