An Economic History of Modern China
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An Economic History of Modern China

Joseph C.H. Chai

As a country’s current development is path dependent, the rise of China and its strategic implications can only be understood in a historical context. Hence, the key to understanding contemporary China is the understanding of its past. So far there has been an absence of a comprehensive text dealing with Chinese economic history in the English language. An Economic History of Modern China fills this important gap, focusing on modern Chinese economic growth and comprehensively surveying the patterns of China’s growth experience over the past 200 years, from the Opium wars to the present day. Key events are traced back to their foundations in history to explain their impact on China’s modern economic growth.
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Chapter 14: Socialist Modern Economic Growth: The Outcome

Joseph C.H. Chai


RAPID INDUSTRIALIZATION What were the results of three decades of socialist modernization in China? The results were mixed. On the one hand, the achievement in economic modernization was impressive. In terms of industrialization, according to official statistics Chinese industries, including manufacturing, mining as well as utilities, grew at a rate of 11.5 per cent over the quarter century from 1952 to 1978, that is, at one of the highest rates in the fast-growing East Asian region (Maddison 2007). However, the official Chinese growth rate of industry has several weaknesses and overestimates the real growth rate (Field 1996). Maddison and Wu, using constant 1987 prices, estimate the rate of growth of industrial gross value-added at 10.1 per cent a year for the same period (Maddison 2007). However, even at this lower rate the growth of China’s industries was impressive when compared with the 1.7 per cent growth rate in the period from 1890 to 1952. As a result the share of industry in China’s gross domestic product (GDP) shot up from 10 per cent in 1952 to 37 per cent in 1978 (Maddison 2007). In terms of share of manufacturing in GDP, an international comparison by the World Bank (1983) shows that China’s share was exceptionally high. As Table 14.1 shows, the manufacturing sector accounted for 24.5 per cent of China’s GDP in 1981 as compared to 18.1 per cent for India and the 13 per cent estimated for large low-income countries. In fact, the size of China’s manufacturing sector at...

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