The Rise, Fall and Return of the Chinese Economy

In the 15^th and 16^th centuries, China’s economy was about 25-35% of the global economy. Then a period of inward looking policies set in and changed the landscape. By the time Mao was in charge, China’s economy was under 5% of global economy. Today, it is about 17% of the global economy – roughly the same as the U.S.

Global Economy – Estimated relative size (%)

AD	China	India	China & India	Britain	Japan	U.S.
1400	30	25	55	1	3	N/A
1500	24.9	24.4	49.3	1.1	3.1	N/A
1700	22.3	24.5	46.8	2.9	4.1	0.1
1900	11.1	8.6	19.7	9.4	2.6	15.8
1930	7.5	6.4	13.9	6.7	3.4	21.8
1950	3.8	4.1	7.9	6.4	3.0	26.8
1970	4.2	3.1	7.3	4.0	6.7	20.4
1990	5.5	3.7	9.2	3.2	7.8	19.4
2000	9.1	5.2	14.3	3.3	7.1	22.2
2015	17.1	9.0	26.1	2.6	4.8	17.5

Source: Macquarie Research, January 2017; Business Insider, 9/1/2017

Interestingly, India declined significantly with colonialism and hit a nadir by 1970. It is only in more recent years that it has shown signs of a resurrection. If the economies of China and India were combined, it was around 55% of the world economy in the 15^th century. Technology, foreign invasion, and other related factors set in motion a decline that benefited largely the Western powers. In more recent years, they together constitute a quarter of the world economy.

Britain, Japan and the U.S. are on the decline. And with a hard Brexit, Britain will just be a shadow of an economy that it once was in the late 19^th or early 20^th century. No empire, no finance, no resources, and no direction a sad tale of a once mighty nation that ruled the waves!

On per capita basis (measured in 1990 USD), Macquarie Research’s Viktor Shvets writes that China was the wealthiest part of the world from 1200 to the 1300s – aside from Italy. Even as late as the 1600s China was roughly on par with Britain. After that it declined all the way to the 1970s. Since then it has picked up but not to the levels seen in the period 1200 to 1600. But it is on the march again. This time it needs to show the fundamental components of a modern society – freedom of speech, political rights, religious freedom, independent media and open internet access. Unless it does so, the world may not accept China’s leadership in the 21^st century.

Reference:          1. Business Insider, US

                                  Elena Holodny, 9/1/2017

                              2. The Diplomat, 25/6/2018