China's Economic History

Study Notes

China was once the world's economic superpower, with innovations ranging from the compass to gunpowder.
Dynasties led global expeditions, establishing China as the center of the global economic universe, alongside India.
Around the 1800s, Europe and the United States experienced a revolution driven by science, machines, and new technologies.
Western countries expanded, gaining power and influence, while China faced challenges in matching their advancements.
China had to concede land to Britain.
The industrial revolution didn't take hold in China.
By the mid-1800s, China's economic standing declined significantly.
China was invaded by Japan, leading to further economic decline and occupation.
After World War II, the West established a global economic system modeled after capitalism.
Capitalism, with some government oversight, fueled economic miracles in countries like Germany, France, and Japan.
The perceived success of capitalism led to calls for less government intervention and greater market freedom.

Milton Friedman, a Chicago-based economist, advocated for unfettered capitalism.
He believed that the free enterprise system was the most effective way to eliminate poverty.
Friedman argued that the sole purpose of a corporation was to increase profits for shareholders.
He posited that increasing short-term gains for shareholders would benefit all of society.
Data from the United States and the West seemed to support Friedman's argument, leading to prosperity.

China resisted capitalism and adopted a one-party rule communist system under Mao Zedong.
Mao's policies hindered China's economic progress and led to widespread poverty by the 1970s.
Deng Xiaoping became China's leader in the 1970s, aiming to reverse China's economic decline.
Deng drew inspiration from the economic success of neighboring countries like Singapore, which had embraced free markets.
He sought to experiment with capitalism while maintaining China's one-party rule.

Deng Xiaoping designated a village in southern China as a special economic zone.
Foreign companies were allowed to invest in this zone under a capitalistic free market.
Hong Kong served as a bridge between Western businesses and the special economic zone.
The special economic zone experienced rapid growth, transforming from a fishing village to a city of over 10 million people.
Average income increased from $1 a day to over $30,000 a year.
The success of the special economic zone led to the establishment of more zones throughout China.
Foreign companies flocked to China for its cheap labor, turning it into the world's factory.
China became the second-largest economy on Earth.

Asia is projected to surpass the rest of the world in accounting for over 50% of global GDP.
This economic transformation highlights China's rise as a powerful economic force.