Global Finance After the Crisis

Global Finance After the Crisis

The United States, China and the New World Order

Richard A. Iley and Mervyn K. Lewis

This thought-provoking book addresses challenging questions raised in light of the aftermath of the global financial crisis that saw an accelerated rise in the economic growth of China and other emerging market economies, while the US, Japan and Europe have laboured under the great recession.

Chapter 1: The rapidly changing world economy

Richard A. Iley and Mervyn K. Lewis

Subjects: economics and finance, financial economics and regulation, international economics, money and banking


For most of its history, China was the dominant economic power in the world. In terms of per capita income, it maintained its advantage over the West until the Renaissance, when it was overtaken by Western Europe. Nevertheless, by virtue of its population size, China remained a large economy through the nineteenth century. Based on Maddison’s (2010) data, China’s economy in 1820 was nearly 50 per cent larger than Continental Europe, the United Kingdom and the United States combined, and accounted for 33 per cent of world GDP. In 1870, despite an overall lower level of GDP than in 1820, China was still by far the biggest individual economy in the world and its GDP was 17 per cent of the world total. By 1950, this share had fallen to less than 5 per cent (Maddison, 1995, 2001). When considering a civilization as old as China the role of status is of paramount importance, for it has always, and continues to be, shaped by what the historian C.P. Fitzgerald called The Chinese View of their Place in the World (Fitzgerald, 1964). Martin Jacques (2009) argues that Chinese identity is defined not in terms of a sense of nationhood but of civilization, and China should be seen primarily not as a nation-state but as a ‘civilization-state’ (p. 13).

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