1050x300 DMa 0928 Lecture

China and Great Divergence: A Global History of Living Standards and Well-being

Author(s): Asia Global Institute

Date: Sep 27, 2016

Theme(s): China

Insights: AGI Lecture Notes

Did the first Industrial Revolution spark the Great Divergence that saw the west overtake China?

Editor’s Note:

China and Great Divergence: A Global History of Living Standards and Well-being served as the inaugural lecture for the AGI Global History Lecture Series. The goal of the Series is to shed light on the present and future of the world by looking at our long-term past. 

Debin Ma, Associate Professor of Economic History at the London School of Economics (LSE) discussed China and Great Divergence: A Global History of Living Standards and Well-being at The University of Hong Kong on September 8. Ma began his lecture with the general premise that 18th century China was the world’s largest and richest economy; he then examined whether this premise was true or whether the period spawned the world’s first Great Divergence in economic growth between England, the Netherlands, China, and Japan. Professor Peter Mathieson, the Vice-Chancellor and Professor Y C Richard Wong, Chair of Economics, were among the audience at the Global History Lecture for which Professor Zhiwu Chen, Director of AGI delivered the opening remarks.

Ma explained that there were two schools of thought on China’s level of affluence in the 18th century: the more traditional view expressed by Adam Smith and the revisionists recently proposed by the so-called California School. The first school of thought is best illustrated by Smith’s quote on the labor power in his book The Wealth of Nations: “the difference between the money price of labour (sic) in China and in Europe is still greater than that between the money price of subsistence; because the real recompense of labour is higher in Europe than in China.” The argument raised by the California school, most notably by Kenneth Pomeranz and Li Bozhong is that living standards in the most developed parts of China (the Yangtze delta) were, in fact, on par with those in most developed parts of Europe.

To take part in this debate on Great Divergence, Ma emphasized the relative weakness of Asian data and emphasized the importance of primary source based research in that direction. Ma and his research group, therefore, compiled Chinese wage data series for 18-20th centuries all converted into in grams of silver. They reconstructed real wage deflated by price indices based on consumption baskets for European and Chinese households, with grain staples and other non-edible essentials deemed necessary for that period, standardized by calories and proteins. The key finding showed Beijing and other Chinese urban centers were in a tie for last place with Milan which, along with other Italian cities, had the lowest standard of living in Europe. The group also found that the standards of living of workers in London and Amsterdam were much higher than those of workers in Beijing, and that this gap further increased from the mid-19th century onwards. By World War I, workers in Western Europe’s industrial core had enjoyed better living standards than their counterparts in Beijing.

Another tool Ma used to pinpoint the divergence involved taking the average height measurement of a Chinese person, which was a good reflection of a person nutritional intake. The research group examined information on height collected from Chinese immigrants and prisoners in selected countries, as well as from the employment records kept by China’s railway companies in the early 20th century. The summary of these findings suggests that there was a further widening of height gap between the Dutch, along with the English, and the Chinese between the 19th and 20th centuries.

Age-heaping – the problem of the self-reported ages rounded up or down to multiples of 5 in demographic survey especially in today’s developing countries, often reflected a person’s lack of counting ability. Using an index of age-heaping for a sampled data in 18-20th centuries, Ma’s team observed practice showed a sharp rise in age-heaping – or a sharp drop in numeracy – for the group born in the period around the 1840s. It points to historic evidence that peasant rebellions devastated living standards and caused what Ma described as a “large destruction to human capital.” But overall, Chinese level of age-heaping was relatively low or level of human capital relatively high compared to the per-capita income level historically.

In conclusion, Ma identified Britain’s first Industrial Revolution as a historic catalyst for the Great Divergence between China and the West. But the gap or divergence in living standards already existed before the onset of Industrial Revolution between China and Northwestern Europe. That gap would persist until China experienced its own economic growth spurt well into the late 20th century, Ma concluded.

 

To access and view Ma’s PowerPoint as used during the presentation, please click here.