Chinese Economic Performance in the Long Run: 960-2030 Ad

by Angus Maddison and Oecd Publishing

This book is unique in its depth of perspective. It uses a comparative approach to explain why China's role in the world economy has changed so dramatically in the last thousand years. It concludes that China is likely to resume its natural role as the world's largest economy by the year 2015, thus regaining the position it had held until 1890. Except for Appendix A, this edition has been revised and updated and Chapter 4 is completely new. The study...

• Format: Paperback
• Language: English
• ISBN: 9264037624
• ISBN13: 9789264037625
• Release Date: October 2007
• Publisher: OECD
• Length: 196 Pages
• Weight: 1.10 lbs.
• Dimensions: 0.5" x 8.2" x 11.0"

Customer Reviews

GDP (2)

I should add that in the five years since this book came out, China's economy has been growing at an average 7% per year. Since 2001 the pace has accelerated, and the Chinese economic engine is now firing on all cylinders, delivering a phenomenal performance which combines high GDP growth with low inflation. Maddison's projection is about to be fulfilled ahead of schedule.

GDP

Maddison predicts a low GDP growth rate for China - 5.5% per year for the next two decades or so, which is lower than most Western estimates. But he also concludes that China's gross GDP in PPP terms will be equal to America's by 2015, on the basis of this low rate.This is a bit of a surprise to me, since Gregory Chow, the Princeton econometrist, believes that China will reach America's level only by 2020 - but on the assumption of 7%.I have second thoughts about Maddison's figures. Some of them don't match from one table to the next.Interestingly, Richard N. Cooper, the Harvard economist and China specialist, discounts the PPP altogether and prefers to calculate on the basis of nominal exchange rates. He predicts China's GDP will be worth under one-quarter America's by 2020. (And yes, he accepts Chow's 7%, as well as about 3% for the US.) This is in line with the US Dept of Energy's forecasts: 23% of US by 2020, then 26% by 2025, based on 6.2% for China and 3% for the US, which I think are reasonable estimates.For those of us who think one-quarter of US GDP is unimpressive, this is certainly true as long as we keep in mind that by 2025, Japan's GDP will be worth just 35% America's - and that Japan will still be the second largest economy in the world (unless the EU is counted as one, in which case it could be larger than America). At 25% of America's GDP, China will be the third largest economy, just after Japan. (Of course, if the EU is counted as one, China will be 4th, Japan 3rd, and America 2nd, and so on for everybody else.)Maddison is quite right that historically China had the largest economy in the world. He estimates that China's population has always been almost twice the size of Europe's, while China's per capita income has been similar to Europe's until about 1300's. (I'm not sure about that, but that's another point.) Therefore, China's gross GDP must have been much bigger than any European economy's. His historical tables, dating back to the year 0, show some very exact calculations which one must take with a grain of salt. (I mean, how does he know with such exactitude?)In a larger sense, Maddison is right. Alone among the great ancient civilizations (Egypt, Mesopotamia, Persia, India, Greece and Rome, etc.), China is a "Great Power" today. And of all the "Great Powers" today, only China can aspire to become America's rival in the foreseeable future.By the way, it is an interesting question why Japan, whose per capita PPP was 10% America's just after World War II (according to Lester Thurow), leapt to America's par by 1990. Japan managed to achieve this feat (impressive indeed) in 45 years, while China, whose per capita PPP happens to be also 10% America's, will rise to maybe one-quarter America's in PPP and much less than that in nominal GDP, by 2025 - 46 years after economic reform begain in 1979? The answer may be that Japan has been modernizing since 1867, while China did not begin until 1949. So China is 80 yea

China: 2015

Using both a quantitative comparative study of international economies, and a historical survey of China's economic history over the past two thousand years, Maddison concludes that China will be the same size as the United States in gross GDP (in Purchasing Power Parity) in 2015.Gregory Chow of Princeton University reaches a similar conclusion in his book "China's Economic Transformation," except that he puts 2020 instead of 2015 as the year of parity.Maddison discounts the Chinese official GDP growth rates of 10% in 1978-95; he believes 7.5% as the most realistic. Yet he is more, not less, optimistic about China than Chow.Interestingly, Maddison puts the GDP growth rates for the US in 1978-95 at 2.5% - one third of China's. This is in line with my estimate that China has been growing at three times the rate as America in the past quarter century. Maddison also believes that the growth rates for China will slow to 5% or thereabouts in the next two decades. This is also in agreement with my estimate that China will grow at twice the rate as the US for that period. Table 2.2a, "Shares of World GDP, 1700-1995" is fascinating. It shows that China was the world's largest economy as late as 1820; Europe as a whole accounted for 26.6% of the world as opposed to China's 32.4%. China was as big as Europe and the US (only 1.8%!!) and Russia (4.8%) put together. In 1995 China had 10.9% of the world GDP, about half as much as the US (20.9%). This table also claims that in 1952, Europe had 29.7% - more than America's 28.4%. That I find unbelievable. In the first years after World War II America had at least 40% of the world GDP while Europe was still just recovering.Maddison did not give the figures, but China could well double its current share of world GDP (12%) to 24% in 2020 as its economy quadruples in the next two decades. Maddison thinks China will only triple in size in that period (that's what 5% does). America retains 24% until 2020, although that's unlikely as its share has been dropping in the last few decades (due primarily to Europe's and Japan's recovery). America's 24% (if that much) will continue to shrink as China continues to lead America in growth - and India leads China - after 2020.