Why China Stagnated

by Don Boudreaux on June 29, 2006

in History

In his compelling lead article in the Spring 2006 issue of the Journal of Economic Perspectives, economic historian David Landes wonders why the industrial revolution didn’t happen first in China.  His answer is unequivocal: although it had lots of genius, China had neither the institutions nor the culture to transform this genius into widespread prosperity.

Almost every element usually regarded by historians as a major contributory cause to the Industrial Revolution in north-western Europe was also present in China [some 500 years before the wealth explosion that began in Europe in the 18th century].

So why, specifically, was there no industrial revolution in China?

Why indeed?  Sinologists have put forward several partial explanations.  Those that I find most persuasive are the following:

First, China lacked a free market and institutionalized property rights.  The Chinese state was always stepping in to interere with private enterprise — to take over certain activities, to prohibit and inhibit others, to manipulate prices, to exact bribes [p. 6].

And as Landes points out on page 7, the Ming dynasty’s attempt to prohibit all trade overseas certainly didn’t help matters.

Landes goes on to criticize severely the Chinese state’s — and people’s — ignorant belief that their culture was so superior to others that they had nothing much to learn from others.

Note that such a belief is truly ignorant and fatal — not just of and for the Chinese centuries ago, but of and for any people at any time and at any place.

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Aaron Krowne June 29, 2006 at 10:10 pm

The west's greatest invention is the capitalist free market, hands-down. Science? The east and middle east were first at that. Democracy? Really the most salient part about that is the free market; without it, you have socialism or communism.

Resident Ego June 29, 2006 at 11:29 pm

What exactly is it that's "ignorant and fatal": that cultures can learn nothing from each other or that some cultures are objectively greater than others (or both)?

ben June 30, 2006 at 7:36 am

Great link, thanks.

I thought Landes' comparison of 17th century attitudes of Chinese to foreigners with today's attitudes of the French to foreigners was telling.

Don Boudreaux June 30, 2006 at 7:39 am

It's ignorant for anyone to suppose that he personally, or his culture, is so close to ideal that he, and it, have nothing to gain from others.

Martin Kelly June 30, 2006 at 8:44 am

Professor Boudreaux,

It all depends on the culture, I suppose. Interacting with Gulf Arab culture seems to have done us more harm than good.

Jaroslav Borovicka June 30, 2006 at 8:46 am

I haven't read Landes' article, but the excerpt states pretty much what Parente and Prescott write in their Bariers to Riches from 2000 [pp. 135-138]. After a period of fast growth during 900-1250, China was as advanced at the beginning of the 15th century as was Europe at the outset of the industrial revolution (i.e. three centuries head start). But then, highly centralized dominant government emerges, destroying competition, imposing nonsense regulations (like the one with overseas trade), prohibiting efficient manufacturing, and creating a clientelistic system in public administration. This effectively banned any further development for almost six centuries.

Jaroslav Borovicka June 30, 2006 at 8:51 am

Martin Kelly: That pretty much depends what period of time you consider. You cannot judge economic development based on the experience from last couple of years or decades. As an example, over centuries during the middle ages, Arab culture was an important source of wisdom for the Europeans after much of European knowledge was reduced to ashes with the fall of Roman empire. In the long term, the interaction was undoubtedly beneficial. Where do you think do the signs for our current numerals come from? Oh yes, Arab writing…

TGGP June 30, 2006 at 1:44 pm

I thought "Arabic numerals" were just borrowed from India. There was a lot of learning around on the part of the Copts and Persians before the Arabs began their conquest and they were simply nomadic herdmen.

Jaroslav Borovicka June 30, 2006 at 1:52 pm

TGGP: True, the origins most likely go back to old Indian cultures (the old Indian glyphs), but Arabs were probably the first who systematically started using these literals in arithmetics, and spread them to Europe as well (or Europeans learned those from Arabs during their travels).

han meng June 30, 2006 at 10:45 pm

I don't have access to the full article and I'm not an economist, but I find the idea of Chinese cultural arrogance as a factor uncompelling. For one thing, for much of China's history, the Chinese were arguably technologically much more advanced than other countries.

For those interested, consider other arguments in Mark Elvin's High-level Equilibrium Trap:

Martin Kelly July 1, 2006 at 1:31 am

Jaroslav Borovicka,

You assume that cultural development is static.

Some Arabs 1,000+ years ago = fairly enlightened.

Gulf Arabs in 2,001 = 3,000 dead New Yorkers.

Trumpit July 1, 2006 at 1:47 am

One could ask the same question about India and host of other countries. I think you show your slanted (pun unintended) point of view when you refer to a lack of industrialization as "stagnation." The original 13 colonies were primarily agricultural. I agree with Jefferson that they should have stayed that way.

Your vision of an ideal world and mine differ by a kilometer. Why hasn't this country adopted the metric system like the rest of the world. Your point is well-taken about our narrow thinking such that we have nothing to learn from other countries. We also elect Presidents like Bush who think that way.

From the Chinese we still have a lot to learn. Anyone who has benefited from Tradition Chinese Medicine knows what I'm talking about. Chinese herbal remedies are a low cost way of successfully treating a host of maladies and afflictions. Why wasn't that included as part of Bush's expensive prescription drug plan? Corporate greed on the part of the pharmaceutical companies and cultural ignorance on the part of the American people are the obvious answers.

han meng July 1, 2006 at 9:15 am

Trumpit wrote:
>The original 13 colonies were primarily agricultural. I agree with Jefferson that they should have stayed that way.

I hope you don't use any of this new-fangled industrial revolution stuff.

>Chinese herbal remedies are a low cost way of successfully treating a host of maladies and afflictions. Why wasn't that included as part of Bush's expensive prescription drug plan? Corporate greed on the part of the pharmaceutical companies and cultural ignorance on the part of the American people are the obvious answers.

In fact, they are scientifically unproven.

Trumpit July 1, 2006 at 12:33 pm

Han Meng:

I suppose Vioxx was scientifically proven to your satifaction. Chinese herbal remedies date back 2,000 years and haven't remained stagnant either. They tend to have few side-effects as well. You would do yourself a service to investigate further. A closed mind isn't a good thing.

ben July 1, 2006 at 6:06 pm


It takes a closed mind to reject the fact, as presented by han meng, that these remedies have been tested and failed. Only a closed mind would continue advocating their use in view of this. 2000 years is irrelevant without efficacy.

ziogontom July 2, 2006 at 10:57 am

I like the idea that China lacked dynamic to develope capilalist because of powerful bureacratic class.They stepped social economy as they like regardless of fair and efficiancy.This remains today as it is testified by the comtemprarily government.

China Law Blog July 4, 2006 at 11:12 am

Great post. Thanks for giving me my 4th of July post!

Ann July 5, 2006 at 8:55 am

I've always felt that the Chinese and Japanese responses to "the West" in the mid-1800s were an interesting contrast. Both China and Japan in the mid-1800s were confronted with technologically-superior foreigners.

The Chinese reaction was "we're the superior race and we didn't invent these things, therefore they must not be valuable". They closed their eyes and ignored the new technology. For example,cannons that were given to the emperor were just left in a corner and never examined. The British resorted to smuggling in opium because they weren't allowed to openly sell new innovations such as clocks and safety matches (and they were determined to trade, because they wanted tea). The Manchurian rulers were more concerned with appearance than reality – not letting the Chinese people see things that were obviously foreign and superior.

The Japanese reaction, on the other hand, was "we're the superior race, but somehow these barbarians have managed to come up with some good stuff; as the superior race, we deserve the best stuff, so let's figure out how to make these things". That's how Japan got Taiwan – the Japanese geared up so quickly that, when they fought China in 1894-95, they beat them easily in spite of China's bigger size.

Japan's main focus was getting the best technology, while China's primary concern was telling itself that it had the best technology.

RandyMason September 29, 2007 at 2:46 pm

So, about topps meat
We have a county size bowling green with large patio, and
summer house. There is crazy golf, toddlers' den and pet
animals and we have a cafe and licensed bar with a pool
table and a large beer garden.

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