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41 The Geographic Setting

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The Chinese Economy Before 1949

China’s economic history over the last century has been marked by dramatic dis-

continuities, in particular the revolution of 1949 and the shift toward a market econ- omy

after 1978. This chapter and chapter 4 organize their discussion of economic
development around those dramatic political and policy turning points. Before 1949,

China never launched into rapid, modern economic growth; since 1949, growth has been

consistently strong, rebounding quickly even after disastrous policy mistakes in the

Maoist years. For more than a century—from the late eighteenth to the early twentieth

century, China’s economic performance was mediocre at best. Moreover, under pressure

from the West, China disintegrated politically. The traditional inter- pretation has been

that China’s economy failed in the nineteenth and early twentieth centuries, and that

1949, therefore, was a fundamental turning point. The enormous differences in economic

performance before and after 1949 certainly suggest changes in economic fundamentals.

A contrasting interpretation stresses that economic development is a long-term process

that consists of the accumulation of human and physical capital, together with the

evolution of institutions appropriate to a modern economy. The economic suc- cess of

China after 1949, combined with the economic success of Chinese under dif- ferent

political systems in Taiwan and Hong Kong, indicates that there were features of the

traditional economy that were supportive of economic development (Rawski 1989;

Brandt, Ma and Rawski 2014). To those following this logic, China could have grown

rapidly under any economic system and, lacking a socialist revolution, could have been

expected to engage in development along capitalist lines. By contrast, those emphasizing

the 1949 turning point argue that the revolution not only established domestic peace but

also redistributed land and empowered poor people politically and economically in a way

that was necessary for economic takeoff (Richardson 1999).

Interpretation of the 1949 turning point also requires an assessment of the performance of

the traditional Chinese economy. Many scholars have engaged in

44

Legacies and Setting

3.1 3.1.1

interpreting the different historical experiences of China and the economically advanced

countries of Western Europe. If we look at China after the collapse of the Qing in 1911 or

after the conclusion of the civil war in 1945, the gap with the indus- trialized West looks

enormous. Yet, as Pomeranz (2000) points out, most of this “great divergence” opened up

relatively late, during the nineteenth century, rather than reflecting long-term differences

in productivity or economic sophistication between China and the West. Did the Chinese

economy “fail” before 1949, and if it did, why? Was the Chinese traditional economy

well suited to economic develop- ment? If so, why was the actual response to the Western

challenge so feeble? Was a basis laid in the pre-1949 era for the vigorous growth after

1949? Finally, the eco- nomic takeoff since 1978 has revived many traditional economic

elements. To what extent has China’s shift to a market economy involved the resurrection