While it may seem as though there was never really much of a convergence between China and its western contemporaries, what factors led to the Divergence in economies that could not be rectified until the latter part of the 20th century?
There are many hypotheses proposed to explain the casual factors accounting for the divergence between China and the west, which range from cultural, geographic to political and legal institutions. One should not rule out the pure element of chance as well. At the risk of simplification, the root of divergence originated much earlier in the way different ideologies and cultural traditions evolved at the two ends of Eurasia. These profoundly shaped the political, administrative and legal institutions which have structured economic incentives and behaviors for people in China and Western Europe. Roughly by the mid-19th century, these cultural traditions came to clash. For the next century, the Chinese response to Western challenges defined China’s political history. The Chinese adaptation and absorption of these Western challenges are critical for explaining the recent convergence or even its overtaking of the West in the latter part of the 20th century.
China appears to be heading for some manner of economic slowdown. Is there anything you might have uncovered that might help Chine ride out the turbulence?
Perhaps the greatest lesson that can be learned from history for the understanding China’s economic success and failures in the past is the importance of understanding China’s place in the world. There are always periods when China viewed herself as the sole legitimate power in the world. These were also times when China tended to close off, particularly in intellectual terms. I think a temporary economic slowdown is nothing to be feared; in fact, is quite normal. But what will be the cause of concern is often a growing sense of over-confidence which could lead to the closing of minds.
If one may take this study within the context of the “past as prologue,” what kind of learning does this data hold for China today?
One important and intriguing that we learn from Chinese history is the relatively high level of human capital even at low levels of per capita income. These relatively high levels of human capital and skills often found limited returns in unfavorable institutional environment in imperial China or most notably in the heyday days of Mao’s command economy. But they very quickly became the driving force of change and growth as soon as institutional environment changed following for example, Deng Xiaoping’s reform from the 1980s. I think this will remain as the main advantage of Chinese economy in the long-run as long as institutional and intellectual continue to improve and open up.
Towards the close of your presentation, you spoke of a Happiness Index – where wealth is not necessarily an indicator of happiness—do you see this source of learning for China ? Why or why not?
Yes, the Happiness is index is a subjective index with a moving target shifting over time with the changing environment. So this feature of the index poses a bit of a problem for policy making. However, research on Happiness index is particularly enlightening for China, which for well-known reasons, have been obsessed with various quantitative indicators of well-being (such as GDP or wage income). These quantitative indicators have been used as criteria for promoting national pride or promoting local officials. But often the question of how average people really feel or want is largely ignored in decades of growth. So, understanding the index of Happiness can help the government and the people re-think about the goal of development and improve the respect for public opinion and democracy.