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World Economy

The evolution of China’s share in the global economy: 1000–2017

JIN Xingye;GUAN Hanhui;LI Daokui;BROADBERRY Stephen

Economic Research Journal,2019,Vol 54,No. 07

【Abstract】 An important measure of the significance of a civilization in the world is its share of the global economy. To understand the role of Chinese civilization in world history and the significance of China’s rapid economic growth in the era of reform and opening up, it is necessary to estimate as accurately as possible the evolution of the share of China in the global economy. This paper provides a systematic re-assessment of China’s share of world GDP from 1000 to 2017. Until now, the literature has been dominated by Angus Maddison, whose work has been widely cited in both the academic community and popular media. Maddison estimated that China’s share of world GDP peaked twice around 1600 and 1820, with latter being the highest at 32.9%. However, Maddison’s Middle Ages and early modern estimates were based on a number of assumptions about Chinese and world GDP per capita throughout history. Such assumptions are critical to his conclusion and need to be further studied. In this paper, we take a different approach from Maddison. We draw data from Broadberry et al.(2018), who apply historical national accounting methods to estimate GDP for China during the Northern Song Dynasty (980–1125), Ming Dynasty(1402–1626), and Qing Dynasty(1685–1840) using data collected from first-hand historical sources and then calculate the output of the Chinese economy during these periods. These GDP estimates are combined with population data to track trends in GDP per capita. China’s GDP per capita fluctuated at a high level during the Northern Song and Ming dynasties before trending downwards during the Qing dynasty. This approach takes advantage of the relatively ample historical data from these Chinese dynasties, and directly estimates aggregate output in a much more reliable way than Maddison, who assumed a certain level of GDP per capita for each country throughout history. As a result of recent advances in historical national accounting, we rely upon fresh estimates of GDP per capita in several European countries, including the United Kingdom, the Netherlands, Belgium, Sweden, Italy, Spain, Portugal, and Germany. We also obtained GDP data for other Asian countries, including Japan and India. For the remaining parts of the world economy, we still rely on Maddison’s estimates. Based on the new historical national accounting data, we draw three main conclusions. First, from 1000 to 1978, China’s share of global GDP initially rose and then declined. The only peak reached occurred around 1600, rather than the two peaks identified by Maddison (1600 and 1820). At its peak, the Chinese share was 34.6%, higher than the 32.9% estimated by Maddison. However, after the Industrial Revolution in the West, China’s share of the global economy declined drastically. It decreased to 5.2% by 1952 and to 4.9% by 1978. Second, since the reform and opening up, China’s GDP has recovered rapidly, reaching a level of 18.2% by 2017. This represents the most rapid gain in history over a four-decade span, in terms of share in the global economy. Third, putting these results in a comparative international framework sheds new light on the timing of the Great Divergence. Since the first half of the 18th century, China’s living standard as measured by GDP per capita has fallen behind major European economies. However, the Great Divergence occurred long before the previous estimates in the literature. Although this finding contradicts the early statements of California School writers, it is broadly consistent with the later views of Pomeranz (2011), who accepted that his early claim that China was on par with Europe as late as 1800 was exaggerated, and now sees an earlier date between 1700 and 1750 as more realistic. Our findings indicate that the reform and opening up of contemporary China has brought about the revival of the Chinese economy for the first time since 1600. The findings imply that China’s ongoing reform and opening up is one of the most significant changes in the global landscape of the past 400 years.

New cycle of the world economy and the changing dynamics

SHENG Lei;QUAN Heng

International Economic Review,2018,No. 04

【Abstract】 After ten years of “new mediocre,” the world economy seems to have gradually shaken off the impacts of the global financial crisis and come out of the prolonged recession, and starts to show more positive signs of recovery and growth now. However, from the perspective of the long cycle, the current world economy remains in the phase of recession of the old development cycle on the whole, which means that it is still in a situation of “structural downturn” marked by low-medium rate of growth. The way out of “structural downturn” depends on the transition of the world economy from the old cycle to a new long cycle of development. Focusing on the long-term development of the world economy in the 21st century, we can see that the following “three changes” will help the world economy achieve the transition to a new development cycle. The first one is the new scientific and technological revolution, which will reshape new impetus for the world economic growth. The second one is the Belt and Road Initiative, which will reconstruct the new pattern of the development of globalization. The third one is the reform of the global governance system, which will rebuild the new rules for world economic development. What is worth mentioning is that in the transitional process of the world economy from the old development cycle to the new one, China in the new era will bring new opportunities to the world, not only contributing to the effective recovery and growth of the global economy, but also helping to steer the world economy towards a new stage of gestation and growth of a new round of long cycle.

Impacts of bi-directional fluctuations of CNY exchange rate on China and the world’s economies: based on single country and multi-country dynamic CGE models

WEI Weixian;MA Xili

Journal of Finance and Economics,2017,Vol 43,No. 01

【Abstract】 With the acceleration of CNY internationalization, the international effect of CNY exchange rate fluctuations is further strengthened. This paper builds the single country and multi-country dynamic CGE models respectively, and simulates two scenarios of continued depreciation and appreciation after depreciation of CNY from 2016 to 2030 based on the latest Global Trade Analysis Project (GTAP) database and Chinese input-output table in 2012. Then it analyzes the impacts of CNY exchange rate fluctuations on China and the world’s major economies from perspectives of price level, international trade, economic aggregate and industrial outputs. It comes to the results as follows. Firstly, as for price index, CNY depreciation will bring some inflationary pressure to China. Secondly, as for trade, CNY depreciation will only extend China’s net export in the short term, and will depress China’s net export in the long term. Thirdly, as for economic aggregate, CNY depreciation will only stimulate China’s whole economy in the first few years, and will lead to a deceleration of China’s economic growth in the long term. Fourthly, as for industrial structure, in the depreciation scenario, the output of China’s agriculture and industry will ultimately decrease after expansion for several years; by contrast, the output of service sector will keep decreasing. In a word, none of these two scenarios is conducive to China’s economic development in the long term. In contrast, the world’s major economies like ASEAN, Japan, and the United States will benefit from CNY depreciation in the long term. Therefore, Chinese government should formulate reasonable policies to strengthen expectation management, implement differentiated foreign trade policies, improve multilateral cooperation and respond to the risks resulting from international exchange rate fluctuations actively.

The difficulties of the long-term growth of world economy and the transformation of Chinese economic growth

LI Xiao;DING Yibing

Northeast Asia Forum,2017,Vol 26,No. 04

【Abstract】 The world now is facing with difficulties for long-term economic growth, and the coexistence of the low growth rate, low inflation, and low interest rate. The short-term cause of this is the structural changes on the supply and demand sides under the shock of the global financial crisis. But in the long run, the more fundamental cause is the historical change of the growth structure of the world economy. The financialization of the US economy since 1980s is a very important structural change of the development of global capitalism in recent five to six centuries. On the one hand, it made the US economy overcome the “geographical-real sector economic space” since 16th century, and open a new “electronic-financial economic space,” and become a “finance state” depending mainly on the advanced financial sector and free flow of capital; on the other hand, it made a double “core and periphery” structure around the US and caused a specialization between “finance states” and the “trade states” in the world, which made other developed and developing countries including the BRICS countries meet with obstacles for sustained growth. The difficulties of world economic growth has close relations with the transformation of Chinese economic growth model; the slowdown of global growth will affect the transformation of Chinese economic growth; and the latter, combined with the positive role of China in the global economic governance, development of the “Belt and Road” and the regional economic cooperation, will become new driving forces for the long-term economic growth of the world.

Study on the contribution and decomposition of “Made in China” to world economic growth ①

ZHANG Tongbin;WANG Shuzhen;BAO Shuming

The Journal of Quantitative & Technical Economics,2017,Vol 34,No. 11

【Abstract】 Research Objectives: We calculate and decompose the influences of “Made in China” on the global economic growth of different production links in the global value chain. Research Methods: Incorporate the trade structure of intermediate products into the framework of global value chain. Research findings: The economic output contribution of China’s manufacturing industry to developed countries is larger than that of the emerging economies, but the growth rate of the added value created by China’s manufacturing industry in the developed countries is lower than that of emerging economies. With the enhancement of the competitiveness of China’s manufacturing industry and the improvement of its technical level, the degree of intra-product specialization of “Made in China” in the global production network is also deepening. Research innovations: We make a reasonable estimation of how China’s manufacturing industry contributes to the world economy and deeply explore the internal mechanisms how it affects the world economy. Research value: It provides the basis and reference for promoting “Made in China” as well as China’s economic transformation and forming a new impetus to economic growth.

World economy: prolonged structural slowdown ①

ZHU Min

International Economic Review,2017,No. 01

【Abstract】 Firstly, the world economic activities are generally at a low level. Secondly, the global financial crisis in 2008 has had a huge impact on the fundamentals of the world economy, dragging on the world economic growth both in overall status and growth rate. Thirdly, although the world economy needs to be driven by the aggregate demand, the world lacks space for fiscal and monetary policies. Fourthly, the world economy is faced with some deep structural changes. As a result, the world economy will continue to be in a structural downturn.

Challenges facing the world economy

YAO Zhizhong

International Economic Review,2017,No. 04

【Abstract】 The world economy is facing four major challenges. Innovation has driven economic growth, but the highest R&D expenditure in history is only accompanied by the lowest long-run economic growth rate in developed economies. Income disparities are rising, and progressivity and redistribution can no longer stop the trend of worsening inequality. Domestic policies are more helpful for managing the failure of globalization, but foreign policies that go against globalization have been seen as more responsible measures. Global debt levels of non-financial sectors are rising continually and it may possibly lead to another crisis, because there lacks a constraint mechanism in the economic system.

Challenges to the world economic structure from TPP

LEI Da;ZHU Dan

International Economic Review,2016,No. 01

【Abstract】 The Trans-Pacific Partnership Agreement, or TPP, attempts to upgrade international trade system, and based itself on the fair trade principle. TPP includes series of rules that help to locate its member economies in the global industrial chain, while at the same time facilitate the establishment of operational organization and disputes settlement mechanism. This paper presents analysis that policy coordination and synchronization among the member countries of TPP will lead to the change of the foundation of international trade from comparative advantage to absolute advantage. As a result, world trade volume will decline. The findings show that change contradicts not only the mainstream economic principles, but also the world economic order centered around the US. The contradictions conflict US re-balancing efforts as well as the multi-coordination mechanism led by the US after WWII. The authors conclude that TPP’s effects on the global industrial chain will probably depart from its goals.

Changing landscape of global economy and China’s role—review of the annual conference of the China Society of World Economics in 2015

ZHANG Guangbin;YANG Yonghua;HAN Yun

International Economic Review,2016,No. 01

【Abstract】 How will the world economy evolve in the future? How will the Chinese economy fare and what are the challenges China faces in the financial field? What do the TPP rules mean and what are their economic implications? How much headway has China made in RMB internationalization and reform of the RMB’s exchange rate formation mechanism? In the field of world economy studies, what achievements have young and middle-aged scholars and economists on international trade, international finance, international investment and multinationals, theoretical and real-world issues in the field of world economy, open economy and China’s reality, and the Belt and Road Initiative made?

World economic order in the post-financial crisis era: economic power, international rules, and governance philosophy

XU Xiujun

The Journal of International Studies,2015,Vol 36,No. 05

【Abstract】 The shock of the financial crisis has brought about the disorder of world economy and a series of adjustments ensued. The crisis, however, cannot remake a new order by itself. The restoration of the world economic order hinges upon the development and change of relative economic power, international economic rules, and economic governance philosophies. After the financial crisis, the relative economic power between emerging and developed economies and among themselves has exhibited a dual-level differentiation, and North-South economic relationship has become more diversified. The competition for rule-making is becoming increasingly fierce among world countries, especially among the major powers, but the difficulty in dominating agenda-setting accelerates the emergence of a non-centered world economy. The status of liberal market economy as the core developmental and governance philosophy is gradually declining. In short, the world economic order is entering into a period of deep adjustment and change, but it is still far from achieving a fundamental transformation.

The impacts of Ukraine crisis on the world economy

OUYANG Xiangying

Russian Central Asian & East European Market,2015,No. 03

【Abstract】 In 2015, the world economy keeps its slow recovery, yet intense geopolitics as well as armed conflicts still contribute to primary risks which lead the world economic downturn. While the Ukraine crisis is far from settlement, it would have five significant impacts on the world economy. First of all, the process of de-dollarization would be accelerated in the world; although the US dollar, playing the role of international currency, could not be threatened in the short run, it would not go the same in the long run. Second, the international supply condition of energy would vary, and then a rebalanced situation of supply and demand in American, European and Russian market is expected to take shape. In the third place, the price of international crude oil drops sharply; food supplies meet a shortage in the world; the bulk commodity market fluctuates significantly. In the fourth place, the gold price in the international market experiences a slight increase, while stock prices in the world continue rising; as both the developed economies and the emerging markets have booming stock markets, the Ukraine crisis would make limited influences on the flow of international capital. Last, European economies face a tough recovery process, which gives more uncertainties to the development of world economy; as a result, the world economy is trapped in a fatigued, weak and unbalanced state.

Prospects for the world economy in 2035

Richard N. Cooper

Northeast Asia Forum,2015,Vol 24,No. 01

【Abstract】 This paper predicts the trend of inertial elements of economic growth in next two decades, focusing on demographic factors (aging and differential decline in population growth), economic growth, and changes in expenditure patterns caused by the increase in income. According to the prediction, the world will be significantly richer and the demands for food, energy and other resources will increase as well. These demands will be satisfied through increased supply, energy conservation, environmental protection and technology innovation, and thus no shortage will emerge. Contagious diseases, terrorist actions and local wars will cause significant disturbances, but the world economy will be resilient to such shocks. China will rise and the relative importance of Europe and Japan will decline.

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