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China’s Rise
and Its Global
Implications
Shaoguang Wang

China’s Rise and Its Global Implications

Shaoguang Wang
China’s Rise and Its
Global Implications

Shaoguang Wang
Institute of State Governance
Huazhong University of Science and Technology
Wuhan, China
Translated by Lei Xiong
B&R Book Program
ISBN 978-981-16-4340-8 ISBN 978-981-16-4341-5 (eBook)
https://doi.org/10.1007/978-981-16-4341-5
Jointly published with CITIC Press Corporation
The print edition is not for sale in China (Mainland). Customers from China (Mainland)
please order the print book from: CITIC Press Corporation.
Translation from the Chinese language edition:《中国崛起的世界意义》by Shaoguang
Wang, © CITIC Press Corporation 2020. Published by CITIC Press Corporation. All
Rights Reserved.
© CITIC Press Corporation 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or
in any other physical way, and transmission or information storage and retrieval, electronic
adaptation, computer software, or by similar or dissimilar methodology now known or
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The use of general descriptive names, registered names, trademarks, service marks, etc.
in this publication does not imply, even in the absence of a specific statement, that such
names are exempt from the relevant protective laws and regulations and therefore free for
general use.
The publishers, the authors, and the editors are safe to assume that the advice and infor-
mation in this book are believed to be true and accurate at the date of publication.
Neither the publishers nor the authors or the editors give a warranty, express or implied,
with respect to the material contained herein or for any errors or omissions that may have
been made. The publishers remain neutral with regard to jurisdictional claims in published
maps and institutional affiliations.
Cover illustration: Shaoguang Wang
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Singapore Pte Ltd.
The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore
189721, Singapore

Preface
Ever since 1949, there have been recurring predictions about PRC’s
imminent collapse. Many are convinced that China’s system would not
work, and its development would sooner or later hit a wall. Why do
so many people have repeatedly made wrong predictions? It has to do
with their tacit theoretical basis and dogmas in the heads of those who
make such predictions. The Preface briefly discusses some of prevailing
“theories” and reveals their unspoken premises: Only systems possessing
certain talismans of power would prevail, and all others are doomed to fail
unless they follow the path suggested by the “theories.” China’s rise over-
turns these theories. The book attempts to explain why China, once an
extremely poor country in the East with no history of colonialism, could
take off after it embarked on the road of socialism. The story of China
tells the world that if China can, so can all others.
Wuhan, China Shaoguang Wang
v

Contents
1 Introduction 1
Ridiculous Prediction 2
Ridiculous Theory 5
What Does China’s Rise Mean to the World? 11
2 Revelation: State Capacity and Economic Development 15
Many Countries (Regions) Carried Out Reform
and Opening-Up 15
Conditions Required for Successful Reform and Opening-Up 19
State Capacity and East–West Divergence 20
State Capacity and China–Japan Divergence 48
Summary 58
3 Groundwork: From Old China to New China 65
National Reality Before the Founding of New China 69
From the Founding of New China up to 1978, Before
the Reform and Opening-Up 87
Summary 110
4 Exploration: From New China’s First 30 Years to Next
40 Years 115
Explorations in the 30 Years Pre-reform 117
Explorations in the 40 Years Post-reform 131
Summary 152
vii

viii CONTENTS
5 Steering: From Planning to Programming 155
Planning Well for Decision Made, Action Taken with Success
Secured 157
Preparedness Ensures Success, Unpreparedness Spells Failure 173
Summary 181
6 Pillar: State-Owned Enterprises and Industrialization 185
New China’s Starting Point 188
From an Agricultural to an Industrial Country, 1949–1984 209
From Industrial Country to Industrial Power, 1985–2019 229
Summary 252
7 Direction: From Economic to Social Policies 253
Take Economic Construction as the Central Task 253
Reduce Inequality 258
Reduce the Sense of Insecurity 264
Summary 281
8 Leapfrogging: Striding from Middle Income to High
Income 287
Appendix: A Look at the “Great Famine” from a Historical
and Comparative Perspective 301

List of Figures
Fig. 2.1 Economic development in China and Soviet-Eastern
European countries (1985 = 1) (Source The Conference
Board, Total Economy Database: Output, Labor
and Labor Productivity, 1950–2018, March 2019) 17
Fig. 2.2 Economic development in China and the nine
countries (1985 = 1) (Source The Conference Board,
Total Economy Database: Output, Labor and Labor
Productivity, 1950–2018, March 2019) 18
Fig. 2.3 Number of conflicts in Europe and China, 1450–1839
(The dotted line represents Europe, the solid line China)
t (Source Adopted from Tonio Andrade, The Gunpowder
Age: China, Military Innovation, and the Rise of the West
in World History, p. 6) 30
Fig. 2.4 GDP per capita in China and Japan, 1661–1900 (Source
Maddison Project Database (Version 2018) by Jutta Bolt,
Robert Inklaar, Herman de Jong and Jan Luiten van
Zanden, https://www.rug.nl/ggdc/historicaldevelopm
ent/maddison/data/mpd2018.xlsx) 50
Fig. 2.5 Tax revenues per capita (koku of Rice) in China
and Japan, 1650–1850 (Source Adopted from Sng
Tuan-Hwee and Chiaki Moriguchi, Asia’s Little
Divergence: State Capacity in China and Japan
before 1850,Journal of Economic Growth, Vol. 19, No. 4
[December 2014], p. 441) 51
ix

x LIST OF FIGURES
Fig. 2.6 Railway operational mileage in China and Japan
1871–1907 (Source B. R. Mitchell, International
Historical Statistics: Africa, Asia & Oceania, 1750–1993,
3rd Edition [London: Macmillan Reference Ltd. 1998],
pp. 683–684) 53
Fig. 2.7 Rebellions during the Tokugawa shogunate and early
years of Meiji Restoration (Sources Roger W. Bowen,
Rebellion and Democracy in Meiji Japan: A Study
of Commoners in the Popular Rights Movement [Berkeley,
CA: University of California Press, 1984], p. 73) 56
Fig. 2.8 Pattern of per capita GDP growth: Korea, Brazil,
India, and Nigeria, 1960–2000 (Source Atul
Kohli, State-Directed Development: Political Power
and Industrialization in the Global Periphery [Cambridge:
Cambridge University Press, 2004], p. 24) 61
Fig. 2.9 State capacity and economic growth (Source Atul Kohli,
States and Economic Development, 2010, http://www.pri
nce-ton.edu/kohli/docs/SED.pdf) 61
Fig. 2.10 State capacity and level of economic development (Source
Susan E. Rice and Stewart Patrick, Index of State
Weakness in Developing World [Washington, DC: The
Brookings Institution, 2008]) 62
Fig. 3.1 The past and present of the state Farm 850
in Heilongjiang Province (Wang Zhen and demobilized
soldiers carry earth to build the dam of the Farm 850
today Yunshan Reservoir on the Farm 850 in 1958) 68
Fig. 3.2 The situation in the far east (Source The cartoon
was created by Xie Zuantai [Tse Tsan-tai, 1872–1937],
and it was first published by the Journal of Furen Literary
Society, in Hong Kong in July 1898) 70
Fig. 3.3 The economic growth rate, 1913–1936 (Source Liu Wei,
Calculation of China’s GDP, 1913–1936, The Journal
of Chinese Social and Economic History, No. 3 [2008],
pp. 90–98) 80
Fig. 3.4 GDP per capita in China, India and African countries,
1950 (International U.S. dollar in 2017) (Source The
Conference Board, Total Economy Database, April 2019,
http://www.conference-board.org/data/economydatab
ase/TED1) 81

LIST OF FIGURES xi
Fig. 3.5 GDP per capita in China, India and African countries,
2019 (International U.S. dollar value in 2017) (Source
The Conference Board, Total Economy Database, April
2019, http://www.conference-board.org/data/econom
ydatabase/TED1) 82
Fig. 3.6 Crime rates in the first three decades (Source Cited
from Xiaogang Deng and Ann Cordilla, To Get
Rich is Glorious: Rising Expectations, Declining
Control, and Escalating Crime in Contemporary
China, International Journal of Offender Therapy
and Comparative Criminology, Vol. 43, No. 2 [June
1999], p. 212) 92
Fig. 3.7 Initial land distribution and economic growth (Average
GDP growth, 1960–2000 [%]) (Source Klaus Deininger,
Land Policies for Growth and Poverty Reduction: A World
Bank Policy Research Report [Washington, DC: World
Bank, 2003], p. 18) 95
Fig. 3.8 Average life expectancy of New China, 1949–1980
(Source Data of 1953–1959 are from Judith Banister,
China: Changing Population [Stanford: Stanford
University Press, 1987], p. 116, Table 4.18; data
after 1960 are from World Bank: World Development
Indicators 1960–2018, http://databank.worldbank.org/
data.download/WDI_excel.zip) 98
Fig. 3.9 Window period of China’s demographic transition (Source
Misbah T. Choudhry and J. Paul Elhorst, Demographic
Transition and Economic Growth in China,India
and Pakistan,Economic Systems, Vol. 34, No. 2 [2010],
pp. 218–236) 99
Fig. 3.10 Window period of India’s demographic transition
(Source: Misbah T. Choudhry and J. Paul Elhorst,
Demographic Transition and Economic Growth in China,
India and Pakistan, Economic Systems, Vol. 34, No. 2
[2010], pp. 218–236) 100
Fig. 3.11 Student enrollments at various types of schools (10,000)
(Source Department of Comprehensive Statistics
of National Bureau of Statistics, China Compendium
of Statistics 1949–2008, Statistical Database of Chinese
Economic Social Development) 101

xii LIST OF FIGURES
Fig. 3.12 Number of reservoirs in China (Source Ministry of Water
Resources of the People’s Republic of China, China’s
Water Conservancy Statistics Yearbook, Statistical Database
of Chinese Economic and Social Development) 103
Fig. 3.13 Construction of large reservoirs 1949–2007 (Source
Ministry of Water Resources of the People’s Republic
of China, China’s Water Conservancy Statistics Yearbook,
Statistical Database of Chinese Economic and Social
Development) 104
Fig. 3.14 Area of effective irrigation (unit: 1,000 hectares) (Source
Ministry of Water Resources of the People’s Republic
of China, China’s Water Conservancy Statistics Yearbook,
Statistical Database of Chinese Economic and Social
Development) 105
Fig. 3.15 Total grain output and per capita grain output (Source
Department of Comprehensive Statistics of National
Bureau of Statistics, China Compendium of Statistics
1949–2008,China Statistics Yearbook, Statistical Database
of Chinese Economic Social Development) 106
Fig. 3.16 Shares of industry, agriculture and tertiary
industry in national economy (Source Department
of Comprehensive Statistics of National Bureau
of Statistics, China Compendium of Statistics
Fig. 3.17 Economic growth rate of China, 1950–1978 (%)
(Note The figures for 1949–1952 refer to the growth
rate of national income, and those since 1953 refer
to the growth rate of GDP. Source Department
of Comprehensive Statistics of National Bureau
of Statistics, China Compendium of Statistics
Fig. 3.18 Comparison of HDI in five countries (Note The
figure after each country is related to the added value
of its HDI from 1950 to 2014. Source Data of 1950
are from Nicolas Crafts, Globalization and Growth
in the Twentieth Century, IMF Working Paper No.
00/44 (March 1, 2000); data of 1980–2014 are
from the UNDP webpage http://hdrstats.undp.org/ind
icators/14.html) 113

LIST OF FIGURES xiii
Fig. 4.1 Varieties of goods under unified allocation
and department-managed goods (Source Li Jingwen,
Direction of Reform on China’s Goods Management
System,Research on Economics and Management, No.
1 (1980), pp. 56–62; Zhang Jianqin, A Comparative
Study of Traditional Planning Economic System in China
and the Soviet Union [Wuhan: Hubei People’s Publishing
House, 2004], p. 217) 126
Fig. 4.2 China’s GDP growth rate, 1949–2018 (%) (Table 3]
Source Data for 1953–2004 are from National Accounts
Department of National Bureau of Statistics, Data
of Gross Domestic Product of China 1952–2004 [Beijing:
China Statistics Press, 2007: Growth rate of GDP; data
for 2005–2008 are from National Bureau of Statistics,
China Statistical Abstract 2009 [Beijing: China Statistics
Press, 2009], p. 22) 130
Fig. 4.3 Employment in urban units of public ownership (Source
National Bureau of Statistics, China Statistical Abstract
2009 [Beijing: China Statistics Press, 2009], p. 45) 136
Fig. 4.4 Historical stages in China’s development (2018 value
of U.S. dollar) (Source The Conference Board, Total
Economy Database, April 2019, http://www.conference-
board.org/data/economydatabase/TED1) 140
Fig. 4.5 Poverty of rural dwellers (Source Comprehensive Statistics
Department of National Bureau of Statistics, China
Statistical Yearbook; China Statistical Abstract; Statistical
Database of Chinese Economic Social Development) 149
Fig. 5.1 Frequency with which English phrase “five-year plan”
appears in Google Book Ngrams 1900–2000 163
Fig. 5.2 GDP per capita and HID rankings in each economy,
1980 (Source UNDP, 2010 Report Hybrid-HDI data
of trends analysis, http://hdrundp.org/en/media/
2010_Hybrid-HDI-data.xls) 164
Fig. 5.3 Variation of GDP per capita of countries in transition,
1989–2019 (calculated at 2018 international US dollar)
(Source The Conference Board, Total Economy Database,
April 2019, http://www.conference-board.org/data/eco
nomydatabase/TED1) 166

xiv LIST OF FIGURES
Fig. 5.4 Quantity of planned metrics and their fulfillment
rate (Note The fulfillment rate of planned metrics
refer to the ratio of the number of metrics fulfilled
(at and above 100%) and the overall number of planned
metrics. Source Yan Yilong, Metrics Governance: Visible
Hand of Five-Year Planning, Beijing: China Renmin
University Press, 2013: 293–295; 326–340) 175
Fig. 6.1 Shares of traditional and new economy in the gross
industrial and agricultural output value (Source Xu Dixin
and Wu Chenming, History of the Development of Chinese
Capitalism, Vol. III [Beijing: People’s Publishing House,
2003], p. 756) 189
Fig. 6.2 GDP composition in 1952 (Source National Bureau
of Statistics, China Compendium of Statistics 1949–2008;
China Statistical Yearbook; Statistical Database of Chinese
Economic and Social Development) 190
Fig. 6.3 Number and employment of state-owned industrial
enterprises (Note Unless otherwise noted, all the data
of figures and tables in this and the next section
are sourced in the Statistical Database of China’s
Economic and Social Development on the China National
Knowledge Infrastructure [CNKI]) 214
Fig. 6.4 SOEs’ contribution to industrial growth, 1949–1984 215
Fig. 6.5 Profits and taxes made by state-owned industrial
enterprises, 1952–1984 216
Fig. 6.6 Rapid growth of state-owned fixed capital investment,
1952–1984 218
Fig. 6.7 Funding sources shares in state-owned economy’s fixed
asset investment, 1953–2000 219
Fig. 6.8 Share of state-owned institutions’ fixed asset investment
in state financial resources, 1953–1984 220
Fig. 6.9 Shares of various sources in state financial revenue,
1950–1984 221
Fig. 6.10 Original value of state-owned industrial fixed assets
and their shares, 1952–1984 222
Fig. 6.11 Per capita national income, 1949–1984 (Source
Department of National Economy Statistics of National
Bureau of Statistics: Compendium of National Income
Statistics 1949–1984, Beijing, China Statistics Press, 1987,
p. 10) 229
Fig. 6.12 Breakdown shares in state financial revenue, 1950–2010 233

LIST OF FIGURES xv
Fig. 6.13 Geographical distribution of total investment in fixed
assets 235
Fig. 6.14 Number of state-owned industrial enterprises and their
employment 236
Fig. 6.15 Profit volume and profit-making percentage of SOEs,
1980–2018 239
Fig. 6.16 Total assets of state-owned and state-holding industrial
enterprises, 1999–2017 (Unit: 100 million yuan) 239
Fig. 6.17 Number of Chinese, United States, and Japanese
enterprise in the Fortune 500 list 240
Fig. 6.18 State-owned fixed asset investment and share, 1980–2017 241
Fig. 6.19 Original value of state-owned industrial fixed assets
and share, 1980–2016 242
Fig. 6.20 Comparison of power generation between China
and the United States, 1949–2018 (Source US data are
from US Energy Information Administration, Annual
Energy Review, http://www.eia.gov/totalenergy/data/
annual/index.php) 246
Fig. 6.21 Countries’ GDP share in global total, 1950–2019 (Source
The Conference Board, Total Economy Database, April
2019, https://www.conference-board.org/data/econom
ydatabase/TEDI) 250
Fig. 6.22 China: Toward high-income economy 251
Fig. 7.1 Shares of consolidated fiscal revenue and expenditure
in GDP (Source Unless noted by specific sources, all
the data used in this chapter are based on a databank
the author compiles from various sources) 257
Fig. 7.2 Central authorities’ transfer payments to localities (100
million yuan) 260
Fig. 7.3 Coefficient of variation of interprovincial GDP per capita 261
Fig. 7.4 Urban–rural income and consumption gaps (rural areas
as 1), 1978–2017 263
Fig. 7.5 National Gini index in China, 1995–2017 264
Fig. 7.6 Urban and rural minimum living security coverage,
2001–2018 (10,000 people) 266
Fig. 7.7 Composition of China’s total health cost, 1965–2018 271
Fig. 7.8 Participation in China’s endowment insurance (10,000
people) 273
Fig. 7.9 Units of indemnificatory housing completed, 2006–2018 278
Fig. 7.10 Participation of unemployment insurance, work injury
insurance and maternity insurance, 1994–2018 (Million) 279
Fig. 7.11 Public spending on social security (100 million yuan) 283

xvi LIST OF FIGURES
Fig. 7.12 Share of public spending on social security in GDP
(Source Chinese data are from a databank the author
compiles from various sources; data for other countries
are from International Labor Organization, World Social
Protection Report Data 2017–2019, http://www.social-
protection.org/gimi/gess/AggregateIndicator.action#exp
enditure) 284
Fig. 8.1 Evidence for “middle-income trap” (Source The World
Bank, Development Research Center of the State
Council, the People’s Republic of China, China 2030:
Building a Modern, Harmonious, and Creative Society,
2013:12) 292
Fig. 8.2 Year an economy turned lower-middle income
and number of years it spent as lower-middle income
(Note The line shown is obtained from the regression
of the number of years in LM on the year the economy
turned LM. The regression result is shown in the figure.
Both the constant and the coefficient on “year
turned LM” are statistically significant at the 1% level
of significance. See Appendix Table 1 for the codes
of each economy. LM = lower-middle income, N =
Sample size, R-sq = R-squared. Source Jesus Felipe,
Utsav Kumar, and Reynold Galope, Middle-Income
Transitions: Trap or Myth? Journal of the Asian Pacific
Economy, Vol. 22, No. 3 [2017], pp. 429–453) 295
Fig. 8.3 Year an economy turned upper-middle income
and number of years it spent as upper-middle income.
(Note The line shown is obtained from the regression
of the number of years in UM on the year the economy
turned UM. The regression result is shown in the figure.
The constant and the coefficient on “year turned
UM” are statistically significant at the 5% and 10%
level of significance, respectively. See Appendix Table
1 for the codes of each economy. N = Sample size,
R-sq = R-squared, UM = Upper-middle income.
Source Jesus Felipe, Utsav Kumar, and Reynold Galope,
Middle-Income Transitions: Trap or Myth? Journal
of the Asian Pacific Economy, Vol. 22, No. 3 [2017]) 296
Fig. A.1 Variation of average crude death rate: Finland (unit:
‰) (Source: Palgrave Macmillan Ltd., International
Historical Statistics [Basingstoke: Palgrave Macmillan;
April 2013]) 305

LIST OF FIGURES xvii
Fig. A.2 Variation of average crude death rate: Germany (unit: ‰)
(Source Palgrave Macmillan Ltd., International Historical
Statistics [Basingstoke: Palgrave Macmillan; April 2013]) 306
Fig. A.3 Variation of average crude death rate: Greece (unit: ‰)
(Source Palgrave Macmillan Ltd., International Historical
Statistics [Basingstoke: Palgrave Macmillan; April 2013]) 306
Fig. A.4 Variation of average crude death rate: United States
(unit: ‰) (Source Palgrave Macmillan Ltd., International
April 2013]) 307
Fig. A.5 Variation of average crude death rate: South Africa (unit:
‰) (Source Palgrave Macmillan Ltd., International
April 2013]) 308
Fig. A.6 Variation of average crude death rate: China (unit:‰)
(Source National Bureau of Statistics, China Statistics
Yearbook [every year]) 308
Fig. A.7 Comparison of before and after Great Leap Forward:
different estimates (unit: ‰) 312
Fig. A.8 Compare with India: UN data (unit: ‰) (Source United
Nations Department of Economic and Social Affairs
Population Division, World Population Prospects: The
2012 Revision, http://esa.un.org/unpd/wpp/index.htm) 313
Fig. A.9 Compare with India: World Bank data (unit: ‰) (Source
World Bank, http://data.worldbank.org/indicator/SP.
DYN.CDRT.IN) 314
Fig. A.10 a GDP per capita and crude mortality rate: 1960. b GDP
per capita and crude mortality rate: 1962 (Source World
Bank, http://data.worldbank.org/indicator/) 316
Fig. A.11 a Height and year born (Chinese men) (Year born). b
Height and year born: 1935–1975 (Chinese women)
(Source Stephen Lloyd Morgan, Stature and Famine
in China: The Welfare of the Survivors of the Great Leap
Forward Famine, 1959-61 [February 2007], Available
at SSRN: http://dx.doi.org/10.2139/ssrn.1083059) 318

List of Tables
Table 2.1 Growth rate of GDP per capita around the formation
of modern countries Unit: % 23
Table 2.2 GDP per capita of the world around the formation
of modern countries Unit: 1990 international value
of US dollars 24
Table 2.3 War-making capacity since 500 CE 28
Table 2.4 Men under arms, Europe 1500–1980 29
Table 2.5 Annual tax revenue per capita, 1500–1909 unit: gram
silver 45
Table 2.6 Comparison of infrastructures between late Qing China
and Japan in the Tokugawa shogunate 52
Table 2.7 Duration of samurai rebellions 57
Table 3.1 Distribution of wars in China, 1912–1930 72
Table 3.2 National education level in 1949 83
Table 3.3 Estimates of mortality rates before the founding of New
China 85
Table 3.4 Growth rate of major industrial products 109
Table 4.1 Shares of different economic sectors (Unit: %) 119
Table 6.1 Comparison of China and India’s economy 190
Table 6.2 Private industry in 1949 192
Table 6.3 Output of major industrial products at early stage
of New China 194
Table 6.4 Comparison of major industrial products between China
and India in 1949 195
xix

xx LIST OF TABLES
Table 6.5 Composition of Capital Volume, 1947–1948 (Unit: Fiat
money100 million yuan in 1936 value) 197
Table 6.6 Variation of total volume of industrial capital II in 35
years up to the founding of New China (Unit: fiat
money, 100 million yuan, 1936 value) 199
Table 6.7 Shares of items of industrial capital II in its total volume
in 35 years up to the founding of New China (Unit: %) 200
Table 6.8 SOE share in major industrial products in 1949 206
Table 6.9 Labor productivity of workers in Industrial Enterprises
Nationwide (Unit: Yuan/Per Capita/Year) 208
Table 6.10 Structural changes in ownerships 1952–1957 (Unit: %) 209
Table 6.11 Improvement of overall labor productivity
of state-owned industrial enterprises (Counted
at the constant price of 1970) 216
Table 6.12 Changes in internal composition of gross output
by industry (Unit: %) 224
Table 6.13 Variations in output ranking of major industrial products
in the world 225
Table 6.14 Geographical distribution of industrial production,
1952–1984 (Unit: %) 226
Table 6.15 State capital dominated sectors, 2016 244
Table 6.16 Top 10 economies’ CIP index and sub-indexes, 2016 248
Table A.1 Number of years taken for mortality rate to drop
from 20 to 10 per thousand in countries, regions,
or races 310
Table A.2 Age distribution of mortality in rural Guizhou, 1958
and 1960 (Unit: %) 319

CHAPTER 1
Introduction
On September 21, 1949, ten days before the founding of the People’s
Republic of China, the First Plenary Session of the Chinese People’s Polit-
ical Consultative Conference (CPPCC) opened in the Hall of Huairen,
or Cherished Compassion, inside Zhongnanhai, the seat of China’s
central leadership in Beijing. The historical mission of this conference
was to prepare for the founding of New China. The assembly unani-
mously adopted the following resolutions: (1) The capital of the People’s
Republic of China would be settled in Beiping (which would be renamed
Beijing beginning from September 27, 1949). (2) The People’s Republic
of China would use the Anno Domini dating system. (3) The March of
the Volunteers would act as the national anthem until a formal national
anthem was created. (4) The five-star red flag would be the national flag
of the People’s Republic of China. The Conference also adopted the
Common Program of the Chinese People’s Political Consultative Confer-
ence, which was of the nature of an interim constitution, and formulated
the Organization Law of the Central People’s Government of the People’s
Republic of China, and the Organization Law of the Chinese People’s Polit-
ical Consultative Conference. The session elected Mao Zedong chairman
of the Central People’s Government, and also elected vice chairmen and
members of the Central People’s Government. At the opening ceremony
of the congress, Mao Zedong, chairman of the Central Committee of
the Communist Party of China, delivered an opening speech, warmly
celebrating the victory of the People’s Liberation War and the People’s
S. Wang, China’s Rise and Its Global Implications,
https://doi.org/10.1007/978-981-16-4341-5_1
1

2 S. WANG
Revolution, and celebrating the founding of the People’s Republic of
China. He solemnly declared: “The Chinese people, comprising one
quarter of humanity, have now stood up.”
Toward the end of this great speech to the founding of the republic,
Mao Zedong made some remarks that sounded very majestic: “Let the
domestic and foreign reactionaries tremble before us! Let them say that
we are no good at this and no good at that. By our own indomitable
efforts we the Chinese people will unswervingly reach our goal.”1 Mao
Zedong was in anguish to say these words, because until 1948, not
only the United States, but also the Soviet Union, believed that China
would be unified under a Kuomintang government, rather than under
the Communist Party. Among those who were saying that China was no
good at the time was not only the United States who was hostile to the
Socialist Camp, but even the Soviet Union, the “Big Brother” of the
Socialist Camp, also had the doubts. Hence the saying that China was
“no good at this and no good at that.”
Ridiculous Prediction
In fact, ever since the founding of the People’s Republic of China in
1949, there have constantly been remarks that China is “no good at this
and no good at that,” and there have constantly been people predicting
when the New China will collapse, fall, break down or even disintegrate.
At that time, many people in the world did not believe that China had
embarked on a broad road of modernization, and even we ourselves esti-
mated that the road ahead would be very tortuous and long. What those
outside were arguing about at the time was not the question of whether
China was going to collapse, but when and how it would collapse, and
what impact the collapse would have on the interests of the neighboring
powers. In 1991, the Soviet Union, the world’s first socialist country,
disintegrated. Since then, predictions about China’s collapse have been
even more deafening. In the summer of 1995, for example, Foreign Policy
published a long article by political scientist Jack Goldstone, entitled The
Coming Chinese Collapse, predicting that “the most likely future scenario
1 Mao Zedong, The Chinese People Have Stood Up! (September 21, 1949) Selected Works
of Mao Tse-tung, Vol. V (Foreign Languages Press, Peking, 1977), p. 18.

1 INTRODUCTION 3
is for a replay of 1911.”2 Of course, in retrospect today these sayings
are obviously not scientific, which only reflect the dark mindset of some
people and a vicious expectation on their part.
It’s needless to mention those endless predictions throughout the
1950s to the 1970s. After we entered the twenty-first century, the crow-
mouthed prophets still tirelessly repeated such “prophecies” that had been
proven false time and again. In August 2001, a book was published in
the United States with the title quite sensational—The Coming Collapse
of China, authored by Gordon G. Chang (Zhang Jiadun), a Chinese-
American. No sooner than it came off the press did the book make
into the New York Times bestseller list, and Gordon Chang became a
celebrity invited by various institutions across the United State, and the
U.S. Congress specially invited him to a hearing. In English, the expres-
sion of “coming” implies that something would happen soon. But how
soon would this “coming” he emphasized could be? A few days? A few
weeks? A few months? A year or two? Chang didn’t say.
There should be quite some people who believe in such an unreli-
able prediction. In March 2002, the non-simplified Chinese edition of
the book was published in Taiwan, and Lee Teng-hui personally wrote a
recommendation for it, saying “this book gives a specific description of
the reality of the mainland, which is worth recommending.” This Taiwan
secessionist knew nothing about the reality of the mainland, how could
he know that this book by Gordon Chang “gives a specific description of
the reality of the mainland”?
Even more ridiculously, another version of the book in Taiwan put my
name on the cover, saying, “Even scholars from Chinese official institu-
tions, Wang Shaoguang, Hu Angang and Ding Yuanzhu, have to give the
‘most serious warning’ to the Chinese government.” Yes, in the summer
of 2002, the three of us did publish an article in Strategy and Manage-
ment entitled The Sternest Warning: Social Instability Behind the Economic
Boom, but what we discussed were some of the challenges facing China at
the time, we never predicted that China’s political system would collapse.
Gordon Chang’s original prediction was that the collapse was
“impending,” which should mean soon. Yet 10 years passed and China
did not collapse. So a lot of people challenged, “How come things you
predicted haven’t come true?” At the end of 2011, Gordon Chang wrote
2 Jack A Goldstone, The Coming Chinese Collapse, Foreign Policy, No. 99 (Summer
1995), pp. 35–53.

4 S. WANG
another article titled The Coming Collapse of China: 2012 Edition. He
admitted that his previous prediction was a bit wrong, but this time it
would be a nail in the coffin. To appear prudent, he affectedly said: “I
admit it: My prediction that the Communist Party would fall by 2011
was wrong. Still, I’m only off by a year. Instead of 2011, the mighty
Communist Party of China will fall in 2012. Bet on it.”
The year 2012 passed, again China did not collapse. Still Gordon
Chang would not give up. In September 2015, he made a new version
of the forecast: 2015: The Year China Goes Broke? Such a person is really
birch-headed, stubborn, and diehard as the beak of dead duck. He has
not made any more predictions since, but who knows if he will come up
with a new one in the future.
In fact, Gordon Chang is not alone. Also in 2015, David Sham-
baugh, an American expert on China, published an article in the Wall
Street Journal entitled The Coming Chinese Crackup, which drew exten-
sive attention. The article claimed that “the endgame of communist rule
in China has begun.” He later argued that he did not mean that. But
the title was so eye-catching, the article so certain, which could not be
excused in a few words of explanation.
In 2017, a couple walking out from the Chinese mainland wrote a
book called China’s Collapse without Break. The man is named Cheng
Xiaonong, who used to work in the department for institutional restruc-
turing while in China; and the woman is named He Qinglian, who was a
reporter at home. I could never comprehend the title of the book, how
can things collapse but not break? They seemed to have the intention of
arguing that China is going to collapse, but they were not sure, so to
make themselves not so absurd, they fabricated such a tune of a collapse
without break.
In 2018, a famous U.S. magazine, The National Interest, published
an article, which made a fuss to ask, Are We Ready If China Suddenly
Collapsed? Later in 2018, the New York Times published a lengthy article
under the headline, The Land Failed to Fail, which meant that China
should be bound to fail, but it did not. The headline revealed a tremen-
dous disappointment. It indicated the West’s perception of China, their
disagreement with China’s social system, which led them to the assump-
tion that China’s system and road of development will certainly not
succeed, and will fail sooner or later. But they have waited for 70 years,
and their expected collapse is still not in sight, yet still they are not
reconciled.

1 INTRODUCTION 5
Ridiculous Theory
Ever since 1949, we have constantly heard people saying that China’s
system is no good, China’s road leads to nowhere, and the Chinese are
bound to run head against a wall. Seven decades have passed, in retro-
spect, all the predictions about China’s collapse have been proven wrong.
This book will indicate with a large amount of data that China has
crossed the mountains and embarked on an increasingly broader road.
The question is, why have so many people been making false forecasts
about China’s future for so long, and insisting in going all the way to
the dark in spite of irrefutable facts? This involves the theoretical basis of
such predictions. Although some people who have made false predictions
may not be clear about what their theoretical basis is, they might have
some dogmas in their minds, and they assume that as long as there is
a system that operates following the dogmas, the state will succeed, or
it will surely fail. More specifically, the Western countries have followed
these dogmas, so they could be and have already been successful. And
these people think that only the road taken by the West is the correct
one, which is bound to be the only way every state must take to succeed,
and has become a paradigm, with no other option. No other road is likely
to work, China’s road included. However, the predictions made on the
basis of these dogmas have failed time and again, for 70 years in a row,
evidencing that these dogmas or theoretical basis for such predictions are
completely wrong.
The “dogmas” and “theoretical basis” mentioned here are actually
written in a large number of textbooks in the West, which circulate day
after day in various media. Such theories have cropped up layer upon layer
and in all kinds. And books about them are so many. Here, I’d briefly cite
a few to show what they are saying, and with their experience and what
they have done in contrast, we’d examine where China’s road to rise is
different at all.
In 1963, William McNeil, a prominent historian at the University of
Chicago, published a book entitled The Rise of the West: A History of
the Human Community,3 which was intended to sing a different tune
with Oswald Spengler’s The Decline of the West. The book was well
received as soon as it came out, and won several book awards. The key
3 William Hardy McNeil, The Rise of the West: A History of the Human Community
(Chicago: University of Chicago Press, 1963).

6 S. WANG
of the book is Part III, The Era of Western Dominance, 1500 A.D. to the
Present. The author suggested that “Europeans of the Atlantic seaboard
possessed three talismans of power by 1500 which conferred upon them
the command of all the oceans of the world within half a century and
permitted the subjugation of the most highly developed regions of the
Americas within a single generation. These were: (1) a deep-rooted
pugnacity and recklessness operating by means of (2) a complex military
technology, most notably in naval matters; and (3) a population inured
to a variety of diseases which had long been endemic throughout the Old
World ecumene.”4 More than 20 years later, the author himself confessed
that the book was in fact “an expression of the postwar imperial mood in
the United States” and “a form of intellectual imperialism.”5
Similar to this book is Eric Jones’s The European Miracle: Envi-
ronments, Economies and Geopolitics in the History of Europe and Asia
published in 1981.6 Since the 1980s, we’ve often heard about the
“Japanese miracle,” “East Asian miracle” and “Chinese miracle,” but
before that, there had long been talks of the “European miracle” in
Europe and the United States. The book title itself is obvious enough
about its main point of view and there is no need to give a detailed intro-
duction. Other scholars later commented on the book, saying that it is
full of European centrism and even tinged with “cultural racism.”7
Over the past 20 years and more, such books have also become fashion-
able. In 1997, American scholar Jared Diamond published Guns, Germs
and Steel: The Fates of Human Societies,8 with a Chinese version available.
The author recognized the fact that Europeans massacred or conquered
other nations, but he tried to focus on answering the question: Why was
it the European societies (the societies that colonized the Americas and
4 William Hardy McNeil, The Rise of the West: A History of the Human Community
(Chicago: University of Chicago Press, 1963).
5 William Hardy McNeil, The Rise of the West After Twenty-Five Years, Journal of World
History, Vol. 1, No. 1 (Spring 19901), pp. 1–21.
6 Eric Jones, The European Miracle: Environments, Economies and Geopolitics in the
History of Europe and Asia (Cambridge: Cambridge University Press, 1981).
7 James Morris Blaut, The Theory of Cultural Racism, Antipode: A Radical Journal
of Geography, Vol. 23, No. 4 (1992), pp. 289–299; James Morris Blaut, The Colonizer’s
Model of the World: Geographical Diffusionism and Europcentric History (New York, NY:
The Guilford Press, 1993), p. 64.
8 Jared Mason Diamond, Guns, Germs, and Steel: The Fates of Human Societies (New
York: W. W. Norton, 1997).

1 INTRODUCTION 7
Australia), rather than the Chinese, Indian or other societies that were
technologically advanced and politically and economically dominant in
the modern world? The answer he gave was that the geographical factor
was crucial, because geographically Europe was divided into dozens or
hundreds of independent and competing small states and centers of inven-
tion and creation. If one state failed to pursue some kind of reform and
innovation, another state would do so, compelling its neighbors to do
the same, or it would be conquered or economically lag behind. In other
words, European countries are more competitive by nature, and the need
to survive has driven them to constantly compete, innovate and develop.
Whereas China was just too gigantic, too unified, and was too short of
competition, so it had been hard for it to develop.9
There is hardly anything new in Diamond’s talks. As early as in 1898,
Zhang Zhidong10 made this passage in his Exhortation to Study:
There are many states in Europe, each confronting the other like groups
of tigers eagerly awaiting an opportunity to devour, no one could survive
unless it evenly matched others. Therefore new methods of governance
that cultivates wealth and strength, and new skills that measure heaven
and earth, study the nature and benefit the people have been put up every
day, which have been imitated mutually and vied to dominate and stay
long. With their territories interconnected, their interflows have become
ever more convenient and they have become ever more well-informed
since railway and ship transport went into smooth operation, which has
led to great refreshing changes over the past 100 years, and the progress
has been especially rapid in the past 30 years. For those who live around
transport hubs, they are well-informed without much effort to learn. For
those students with esteemed friends, they gain a lot without much labor.
The periods of Spring-Autumn (770-476 B.C.), Warring States (476-221
B.C.) and Three Kingdoms (220-280 A.D.) in China’s history witnessed
more talents than other eras. But once the states were amalgamated into
one country in the bygone dynasties, as a unified country towering alone
in the East, its neighbors were all remote barbarians or desert tribes, and
none of them had a ruling art or academic studies better than China’s.
9 Jared Diamond, How to Get Rich, http://www.edge.org/conversation/how-to-get-
rich.
10 Zhang Zhidong, or Chang Chi-tung (1837–1909), one of the prominent officials
of the late Qing Dynasty (1644–1911) and a leading Chinese reformist in the nineteenth
century for the country’s industrialization and modernization—Translator.

8 S. WANG
So it was enough for China to rule without troubles just by following the
old ways with some modifications when necessary, and adhering to the old
learning without going beyond the range. As it gets farther away from the
ancient times, old defects have piled up increasingly and quintessence of
the old ways and old learning gradually paled, then we find ourselves to
appear deficient in comparison with others as all the five continents are
interconnected today.11
As a theoretical hypothesis, Diamond and Zhang Zhidong’s notions are
quite interesting. The question is, geographical features won’t change
much for tens of thousands of years, but the development momentums
in various countries could be reversed in decades or hundreds of years. It
doesn’t seem to make sense to interpret variables with constants. China
is still very gigantic and unified today, isn’t it true that it has nonethe-
less developed? How could Diamond and Zhang Zhidong’s theoretical
assumptions explain it?
In 1998, an influential book was published in the United States,
which is The Wealth and Poverty of Nations: Why Some Are So Rich
and Some So Poor12 authored by David Landers, a retired professor at
Harvard University, with Chinese version available. The book cites several
key variables to explain the wealth and poverty of nations. The first is
geographical position, or more accurately, climate, as “the rich countries
lie in the temperate zones, particularly in the northern hemisphere; the
poor countries, in the tropics and semitropics.” Climate has always been
an important factor in Western theories that explain social and political
changes, one example is Montesquieu’s The Spirit of Laws. In addition to
climate, other variables include competitive politics, economic freedom,
and approaches toward science and religion. In other words, the West
succeeds because they are Western countries and they have done things
in compliance with Western values. Some have criticized Landers as a
Western centrist, and he does not deny it. According to the theory in
The Wealth and Poverty of Nations, it should be impossible for socialist
China under the leadership of the Communist Party to succeed, because
its geographical location and climatic conditions are all wrong, and it
11 Zhang Zhidong, Exhortation to Study (Zhengzhou: Zhongzhou Ancient Books Press,
1998).
12 David Landers, The Wealth and Poverty of Nations: Why Some Are So Rich and Some
So Poor (New York: W. W. Norton, 1998).

1 INTRODUCTION 9
lacks the political, economic and cultural factors for success that he has
emphasized.
Ten years later in 2008, American political scientist Jack Goldstone
published Why Europe? The Rise of the West in World History 1500–1850.13
According to the author, it was not colonialism and conquest that made
the rise of the West possible; on the contrary, it was the rise of the
West (technically) and the decline of other regions that allowed European
power to extend completely throughout the entire planet. Having white-
washed colonialism, the author claimed that there was not a single but
multiple factors for Europe’s success. He cited six factors: (1) new find-
ings leading to the emancipation of mind; (2) mathematical and scientific
way of thinking; (3) research methods of experimental science; (4) tool-
driven experiments and observations; (5) tolerance and pluralism; and (6)
interaction between entrepreneurs, scientists, engineers, and artisans. He
believed that these are the most important explanatory variables devel-
oped in Europe and the United States. If we use the six factors to explain
China, arguably the six of them seem to be there but are not real. Suppose
China has always had these factors, why did modern China fall so low?
But if China has always missed them, then how do we explain the rapid
economic development in the 70 years after the founding of New China?
In 2010, Ian Morris, an archeologist and historian at Stanford Univer-
sity, published Why the West Rules: For Now—The Patterns of History, and
What They Reveal About the Future.14 The book’s main explanatory vari-
ables are also geographical conditions. According to the author, biology
and sociology can explain global similarities, while geography can explain
regional differences. In this sense, geography can be used to explain why
the West dominates the world: Europe has the Mediterranean Sea, while
China does not have its own Mediterranean. Along the Mediterranean
Sea, European countries were able to get involved in maritime trade
through the development of navigation technology, with a relatively large
trading. Moreover, the navigational technology also enabled European
countries to discover new continents at an early stage, and expand markets
and sources of raw materials. These were what China missed without
13 Jack A Goldstone, Why Europe? The Rise of the West in World History 1500–1850
(New York: McGraw-Hill Education, 2008). He is the very scholar who predicted in
1995 that China’s collapse was bound to happen.
14 Ian Morris, Why the West Rules—For Now: The Patterns of History, and What They
Reveal about the Future (New York: Farrar, Straus and Giroux, 2010).

10 S. WANG
its own Mediterranean. The question again is that although geograph-
ical factors are constant, the level of economic development could be up
and down. China’s geographical conditions have not changed much as
compared with what it was like hundreds or thousands of years ago, which
was even more so at the time around the founding of New China. Then
why the New China has succeeded but the Old China failed? How to
explain this?
In 2011, British historian Niall Ferguson published Civilization: The
West and the Rest.15 The author is very interested in China and often
comes to China for exchanges with various universities. He concluded
that the West could rise after 1500 and led the rest of the world (including
China) just because their political institutions had six “killer apps” which
were not existent in other countries: the first was the competition, the
second was science, the third was the rule of law, the fourth was medical
science, the fifth was consumerism, and the sixth was work ethics. The
inherent logic of this saying is not clear, but much like a jumble. It
just intends to imply that they lead the world just because they have
their family heirloom unique to them, which is not available to others.
According to this logic, there is no chance for other countries to turn
over, unless they holistically copy the six killer apps from the West. The
question is, even if you want to copy, could you really do it? Will they
give up their killer apps they have treasured so much?16
Finally, I’d mention a book published in 2012, entitled Why Nations
Fail: The Origins of Power, Prosperity and Poverty, authored by Daron
Acemoglu, an economist at the Massachusetts Institute of Technology,
and James Robinson, a political scientist at Harvard University.17 Their
argument is simple but powerful, holding that some countries fail because
their political institutions are extractive and other countries succeed
because they are within a system that is inclusive. Western countries have
inclusive systems, so they succeed. The Communist-led countries are of
course within the system that is extractive, so it is impossible for such
15 Niall Ferguson, Civilization: The West and the Rest (New York: Penguin, 2011).
16 Ferguson even believes that China’s rise after 1978 (rather than after 1949) has
benefited from its opening up, whereby it has learned the West experiences. His Civiliza-
tion was translated by Zeng Xianming and Tang Yinghua into Chinese and published by
the CITIC Press Group, Beijing in 2012.
17 Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power,
Prosperity and Poverty (New York, Crown Publishers, 2012).

1 INTRODUCTION 11
countries to succeed; even if they look like successful in a short period, it
is not a real success, it must be short-lived, a flash in the pan, and is bound
to doom. Let’s say nothing about whether this theory could explain the
rise of the West (in what sense were Europe and the United States “inclu-
sive” throughout the eighteenth and early twentieth centuries?), will it be
able to explain China’s performance in the recent decades? The authors
put on an air of prophets and said unquestionably: “China under the
rule of the Communist Party is another example of society experiencing
growth under extractive institutions and is similarly unlikely to generate
sustained growth unless it undergoes a fundamental political transfor-
mation toward inclusive political institutions.” Perhaps ignorance could
magically give people the guts to look down upon everything.
What Does China’s Rise Mean to the World?
The arguments of the books cited above vary, so do their approaches to
the accomplishments China has made, but their unspoken basic assump-
tions are the same, that is, the Western experience is the key to understand
the success or failure of all nations. The experience of other countries does
not seem to be worth mentioning; and if one insists in mentioning it, it’s
nothing more than some painful lessons.
The reason why I’ve taken pains to present these prominent Western
scholars’ theories on economic rise above is nothing more than to illus-
trate that some Western scholars have a common problem, that is, they
are often conceited about the achievements their own countries made in
the past few centuries, always seeking to find some secrets to their success
that can be universally applied, and measure the realities of other coun-
tries (China included) with the framework of these theories about Western
success. In fact, it seems to me that the so-called theories offered by
those voluminous works not only could explain China, but also they could
hardly explain the West itself. Some of them admit that imperialism, colo-
nialism, slavery and slave trade played a considerable role in the success
of the West. But what marvels is that with a neat twist, they suddenly
halt the discussions about how much of a role these brutal, bloody and
ugly pasts have played, but rather move to shift people’s attention to
the so-called bright spots of the West, such as “democracy,” “market,”
“private ownership,” “competition,” “rule of law,” and “science,” things
that mainstream Western ideology has always advocated. These rhetoric
expressions of theirs are the mainstream in the West, which some people

12 S. WANG
in the Third World (China included) have accepted and believed blindly.
Once such theories are internalized, the prediction about China will only
point to one direction, that is, it is impossible for China’s system to func-
tion sustainably and effectively, and even if some achievements are made
in a short period, it will eventually go bankrupt. Unfortunately for them,
none of their predictions has come true. Now the New China has gone
through 70 years, the country is going ever higher up step by step, getting
ever richer and stronger, and it will soon become a member of the high-
income club. Seventy years are not a short period. For human beings,
it was rare to see people living to 70 years old in ancient times. So the
predictions made by some people in the West are completely unscientific,
with their theoretical foundation totally wrong, and they have become a
laughing stock of history.
To sum up, over the past 200 years, many Western scholars have tried
to put forward theories to explain the following questions: Why could
the West dominate the world? Why are some countries prosperous but
other countries decaying? Why have China and other developing coun-
tries lagged behind? They all try to point out that this is because the
West has something unique (institutional, cultural, racial, geographical,
and climatic) that is not available to other countries. Now their predic-
tions about China have proven mistaken, and China has walked out a
road of its own, suggesting that their theories cannot answer their own
questions and that China’s rise is significant to the world.
In realistic sense, the practice of China’s rise tells the world:
1. A poorest country in the world (in 1950, China was one of the
poorest countries in the world) can turn over.
2. A country that has never invaded other countries or imposed colo-
nialism can develop. (The early stages of development or primitive
accumulation in Europe and the United States, including some
Nordic countries, were all accompanied by aggression into other
countries and colonialism.)
3. An ancient civilization in the East (not Anglo-Saxon, Protestant,
South European or East European culture) can develop. (The TV
documentary series River Elegy once asserted that our cultural genes
impeded our own development.)
4. A socialist country can develop, which resembles neither those
early capitalist countries like Britain and the United States (with
the mortality rate rising rather than declining in the early days of

1 INTRODUCTION 13
industrialization) nor Japan and South Korea—they are vassals of
imperialism and have the support and preferential treatment from
the United States.
5. A country with a population of more than one billion can develop.
There are precedents of rapid development realized in small
economies over a period of time, like former Yugoslavia. But it is
much more difficult for big countries, and China’s population is
about the size of the 36 member countries of the Organization for
Economic Co-operation and Development plus Russia’s population
put together.
6. A country’s economy on the right road of development can grow
sustainably over a long term and it could constantly make self-
adjustments on its way.
The six points above tell the world that if China can succeed, so can
other countries.
In theoretical sense, the Western model emphasizes that some precon-
ditions (in culture, politics, etc.) are necessary for modernization; but
China’s road indicates that the rise of a country does not have to copy
the Western model. China’s road is equivalent to a more profound Protes-
tant Revolution: the West tells the world that people could only follow
its way if they want to develop; while China tells the world that so long
as people persevere in walking on their own way, every country could get
developed. The word “road” in the expression of China’s road can be
understood as “way,” and as China’s sixth-century BC sage Laozi noted
in the famous philosophical work Tao Te Ching, “The way that can be
explained is not the Unchanging Way.” China’s road does not refer to any
single policy, mechanism, and institution, its essence is “independence,
seeking truth from facts, getting adapted according to local conditions.”
This book attempts to explain why the New China as a poor country,
a country of peace, an Eastern country, a socialist country, and a country
with a big population could rise. As a Chinese scholar, I am not like
some Western scholars who are so explosive with their self-confidence that
whenever they speak they would utter some “killer apps,” and whenever
they write they would burst into lengthy works with theoretical frame-
works that could explain all countries and regions throughout thousands
of years of history. This book focuses on the explanation of China’s
rise, but it will examine the case of China in the context of compar-
ison and historical perspective, in an attempt to tell clearly a Chinese

14 S. WANG
story, while straightening out lines of other countries’ rise. Chapter 2
explores an important prerequisite for economic rise from a compara-
tive perspective—“state capacity.” Chapter 3 examines from a historical
perspective why things the Old China failed to accomplish could be done
by the New China, with the standing point still on the “state capacity.”
Chapter 4 summarizes the continuous explorations the New China has
made over the past 70 years. Chapter 5 introduces a secret weapon in
China’s development, which is the “medium- and long-term planning.”
Chapter 6 discusses the unique contributions of state-owned enterprises
and state capital to China’s industrialization and economic moderniza-
tion. Chapter 7 shifts the focus from economic development to social
progress, demonstrating China’s unprecedented great leap forward in
social security over the past 20 years. Chapter 8 argues from the perspec-
tive of theory and comparison that there is no such a thing as “Middle
Income Trap,” and even if such a trap does exist, China will certainly be
able to stride over it and enter the high-income stage. This book “does
not listen to false talks and does not follow impractical methods,” but uses
a large number of charts and tables while making theoretical reasoning,
in the hope to speak with data. After all, “one real thing overwhelms a
thousand false ones.’

CHAPTER 2
Revelation: State Capacity and Economic
Development
Since its founding, the New China has made great achievements recog-
nized all over the world. No matter compared with whatever economies
or measured in whatever dimensions, these achievements are superb and
one for the books. However, could China’s experience prove that a
country is bound to succeed so long as it is engaged in reform and
opening-up? I’m afraid not. Whether in the last 400 years, or in the past
40 years, many countries and regions carried out reform or opened up,
but in most cases they failed, the successful were only a minority.
Many Countries (Regions) Carried
Out Reform and Opening-Up
At the end of the nineteenth century and the beginning of the twentieth
century, in the face of the formidable military and economic pressures
from Western powers, many countries embarked on the road of reform
and opening-up, with the aspirations to realize modernization. In the
mid-nineteenth century, Governor of Egypt Mohamed Said Pasha began
to carry out land, tax, and legal reforms, founding the Bank of Egypt
and building the country’s first standard-gauge railway. The Ottoman
Empire underwent reforms for nearly a century up to its collapse (1923).
In Iran, Reza Shah (1878–1944), the founder of the Pahlavi dynasty,
modeled after the West in carrying out a series of reforms, including
the construction of the Trans-Iranian Railway, founding the University of
S. Wang, China’s Rise and Its Global Implications,
https://doi.org/10.1007/978-981-16-4341-5_2
15

16 S. WANG
Tehran, parliamentary reforms, and so on. At the end of the nineteenth
century and the beginning of the twentieth century, after the Westerniza-
tion Movement and the Reform Movement of 1898, China’s Qing rulers
introduced the New Policies of the late Qing Dynasty (1644–1911),
which covered political, economic, military, judicial, cultural, and educa-
tional fields. None of the above reforms and opening-up was successful.
Only Japan, after the Meiji Restoration in 1868, enhanced its national
strength and embarked on the road of modernization.
Similar examples are numerous in the past 40 years. In 1980, Turkey
announced to begin economic reforms. In the same year, Eastern Euro-
pean countries also successively carried out economic restructuring.
Throughout the 1980s, sub-Saharan African countries (Cameroon,
Gambia, Ghana, Guinea, Malawi, Madagascar, Mozambique, Niger,
Tanzania, and Zaire) all began to reform, so did India. In 1983, Indonesia
carried out reforms of economic liberalization. In 1986, Vietnam initi-
ated the Renovation reforms. In the same year, Gorbachev began his
“New Thinking”-oriented all-round reforms. In the late 1980s, a group
of Latin American and Caribbean countries underwent structural reforms.
By 1989 and 1990, the 15 republics of the former Soviet Union and
the socialist countries of Eastern Europe all abandoned socialism and
thoroughly transformed following the Western capitalist system. Some
of the above-mentioned reforms are relatively successful (like those in
Vietnam); others have slowly embarked on the right track after many trials
(as what happened in India); but most of them failed, and some were even
catastrophic, such as the cases in some Eastern European countries.
Figure 2.1 compares the economic growth trend of China with those
of the former Soviet Union republics and Eastern European countries.
With the year 1985 as the base line, China’s GDP per capita (gross
domestic products per capita) grew nearly sevenfold by 2018, leaving
other countries far behind. Among the former Soviet Union republics and
Eastern European countries, Turkmenistan performed the best, which
ranked fourth in oil and gas resources in the world with a population size
similar to that of Bao’an District in Shenzhen. Of the rest 25 countries,
only six had their GDP per capita more than tripled in the 33 years.
In Fig. 2.1, the growth curves of 26 countries, excluding China,
huddle together, covering up some of the countries with the poorest
performance. Pick out the nine such countries and compare them with
China, as shown in Fig. 2.2, their GDP per capita barely improved from
33 years ago, with four of them even seeing it going down instead of up.

2 REVELATION: STATE CAPACITY AND ECONOMIC DEVELOPMENT 17
0
1
2
3
4
5
6
7
8
19851987198919911993199519971999200120032005200720092011201320152017
China Albania Armenia
Azerbaijan Belarus Bulgaria
Croa a Czech Republic Estonia
Georgia Hungary Kazakhstan
Kyrgyz Republic Latvia Lithuania
Macedonia Moldova Poland
Romania Russian Serbia & Montenegro
Slovak Republic Slovenia Tajikistan
Turkmenistan Ukraine Uzbekistan
Fig. 2.1 Economic development in China and Soviet-Eastern European coun-
tries (1985 = 1) (Source The Conference Board, Total Economy Database:
Output, Labor and Labor Productivity, 1950–2018, March 2019)

18 S. WANG
0
1
2
3
4
5
6
7
8
China Croa a
Georgia Kyrgyz Republic
Macedonia Moldova
Russian Serbia & Montenegro
Tajikistan Ukraine
Fig. 2.2 Economic development in China and the nine countries (1985 = 1)
(Source The Conference Board, Total Economy Database: Output, Labor and
Labor Productivity, 1950–2018, March 2019)
The worst case is Ukraine, where the GDP per capita in 2018 was 27%
lower than in 1985. By Western standards, Ukraine’s reform and opening-
up is perhaps the most radical, carrying out both market economy and
democracy, but it ended in tragedy. Slow economic growth is a common
scenario throughout human history, but it is rare to see an economy go
backward so severely over such a long period of time. The mainstream
media in the West never tell people that reform and opening-up following
their scheme could have such catastrophic consequences.

The above comparison reveals a simple fact that there are many cases
of reform and opening-up, but not many successful. Many people assume
without much thinking that as long as the reform and opening-up is
carried out, it will inevitably lead to prosperity. This view is unfounded
both in theory and in practice. The so-called reform and opening-up
alone may not realize the goal of getting both the country and people
rich.
Therefore, it is worth asking what conditions are necessary for rapid
economic development aside from the policy of reform and opening-up.
Conditions Required for Successful
Reform and Opening-Up
In my opinion, the success of reform and opening-up requires two types
of preconditions.
The first type is to have a solid foundation, including political basis
(independence, national unity, social stability, eradication of “distribu-
tional coalitions”), and social basis (social equity, public health, universal
education), and material basis (water conservancy facilities, farmland
capital construction, initial scale of a large and complete industrial
system). The success of China’s reform and opening-up over the past
40 years is just due to a very solid foundation laid in the first three
decades since the founding of New China. The importance of laying the
foundation can never be overemphasized too much.
The second type is to have an effective government, that is, a govern-
ment with the infrastructural state capacity. The reason is actually very
simple: each reform will inevitably lead to regrouping of the existing
pattern of vested interests; the more drastic the reform, the greater the
breadth, depth and intensity of the regrouping of interests, and the more
likely the capsizing of the ship. To cope with this situation, an effective
government is a must, which should be able to control the overall situa-
tion, adopt various ways to ease and mitigate the corresponding impact,
and overcome all kinds of resistance and obstacles, so that reform and
opening-up could be successful. In other words, the arguments in this
chapter can be summed up in one sentence: To realize the economic
growth, one factor is necessary aside from reform and opening-up, that is,
there must be an effective government with infrastructural state capacity.
What is state capacity? It is the ability of the state to turn its will into
action and reality. Every country has its own will, or things it wants to be

20 S. WANG
done, but it is never easy to turn the will into action and reality, or there
won’t be so many troubles in the world.
What is infrastructural state capacity? After years of research, I think
that seven types of state capacity are essential, including (1) coercive
capacity: the state should be able to monopolize the legitimate use of
violence so as to encounter external threat to the sovereignty and internal
threat to social order; (2) extractive capacity: the state should be able to
extract from the population a share of the yearly product of its economic
activities, such as fiscal taxation; (3) assimilative capacity: the state should
be able to shape national identity and cultivate a set of core values among
the people so as to retain a high degree of moral unity in the country.
In addition, there are capacities to identify, to regulate, to steer, and to
redistribute. As for such infrastructural state capacity, I have discussed it
in detail in several books and papers, and I will not repeat them here.1
What is the relationship between reform and opening-up, state capacity
and economic growth? It would become clear once we analyze the three
major divergences in history: the Great Divergence between the East and
the West, the Great Divergence between China and Japan, and the Great
Divergence that occurred among the developing countries after World
War II.
State Capacity and East–West Divergence
The Great Divergence of the East and the West means that there had
been not much difference between the two over a long period of time,
but then the West gradually rose, and finally dominated the world (some
people call it the “European miracle”), while the East remained in a
slump and lagged far behind. Historians do not seem to dispute over
the Great Divergence between the East and the West, they only disagreed
on its timing and causes. Some scholars hold that the Great Divergence
took place in the eighteenth century, others argue that it occurred earlier,
between 1500 and 1600. The dispute over the timing of the divergence
is in fact a one over its causes. Either way, however, most might agree
1 Wang Shaoguang and Hu Angang, Report on China’s State Capacity (Shenyang:
Liaoning People’s Publishing House, 1993); Hu Anguang and Wang Shaoguang, The
Second Transformation: State Institutional Building, Revised Edition (Beijing: Qinghua
University Press, 2009).

that the Industrial Revolution in the mid-eighteenth century was the real
watershed between the East and the West.
To explain why the Industrial Revolution took place in Europe rather
than elsewhere, it is necessary to take a look at whether some events had
happened in Europe before the Industrial Revolution, but yet to happen
in the East. These events may be related to the Industrial Revolution,
because the time sequence foreshadows the logical cause and effect.
In retrospect, six major events had already taken place in Europe before
the Industrial Revolution (the latter half of the eighteenth century to
the nineteenth century): the Scientific Revolution (sixteenth–eighteenth
centuries), the Military Revolution (sixteenth–seventeenth centuries), the
emergence of fiscal-military states (seventeenth–eighteenth centuries),
large-scale colonialism (sixteenth–nineteenth centuries), large-scale slave
trade (sixteenth–nineteenth centuries), and tax revenue growth (seven-
teenth–twentieth centuries).
Many people believe that the Scientific Revolution played a great role
in promoting the Industrial Revolution. Especially with the rise of “New
Economics” or the theory of endogenous growth in the 1980s and 1990s,
many people believe that the economy could achieve sustained growth
just relying on endogenous technological progress instead of relying
on external force. An American economic historian even wrote a book
to prove this, which is entitled The First Knowledge Economy: Human
Capital and the European Economy, 1750–1850.2 The book uses some
fashionable new concepts such as “knowledge economy” and “human
capital,” but its arguments are not new, much the same as another book
published 45 years before titled Science and Technology in the Industrial
Revolution.3 However, the relationship between the Scientific Revolution
and the Industrial Revolution has been debated in academia for nearly
100 years, and there are not many people who ascertain that the Scientific
Revolution promoted the Industrial Revolution. A consensus reached in
this domain is that the Second Industrial Revolution (around 1870–1914)
did benefit from scientific research, but it is still controversial as to how
2 Margaret C. Jacob, The First Knowledge Economy: Human Capital and the European
Economy, 1750–1850 (Cambridge: Cambridge University Press, 2014).
3 Albert Edward Musson and Eric Robinson, Science and Technology in the Industrial
Revolution (New York: Gordon and Breach, [1989], c1969). The first edition of the
book was published in 1969, and the introduction to the second edition was written by
Margaret C. Jacob, which indicates the inner context of the two books.

22 S. WANG
much the Scientific Revolution had to do with the First Industrial Revo-
lution (around 1760–1840). The prevailing view in academia is that up
to the seventeenth century, the scientific evolution was non-cumulative
and had little to do with technological progress. It was not until the
late nineteenth century when the scientific evolution became cumulative
and closely related to technological progress. Throughout the seventeenth
and mid-nineteenth centuries, science did not contribute significantly to
technological progress and therefore had little to do with the Industrial
Revolution. During the period, artisans with little formal schooling and
no scientific research literacy were the main force in technological inno-
vation.4 For example, the textile and smelting industries that dominated
the First Industrial Revolution had little to do with the scientific research
of the time.5
The other five events reflect changes in state capacity from different
aspects, and the strengthened state capacity is likely to be associated with
the emergence of the Industrial Revolution.
Let’s look at a simple fact first. Before modern states (states with
certain capacity to coerce and extract) emerged in Europe, different
regions in the world were in similar situation: the long stagnated economy
with little growth. But things changed when modern states emerged in
Europe (after 1500), as their economic growth began to pick up. At
first the growth rate was not significant, with the average annual growth
rate of GDP per capita in Western Europe rising from 0.12% in the
years of 1000–1500 to 0.14% in 1500–1820, a mere difference of 0.02%.
However, as the infrastructural capacity of those Western European states
improved, their economic growth rate gradually increased, rising from
0.98 in 1820–1870 to 1.33% in 1870–1913. In the first half of the
twentieth century, Western Europe experienced two World Wars, when
the growth rate dropped to 0.76%. After World War II, European capi-
talism entered a golden age for its development, when the growth rate
climbed up to 4.05%. China throughout the nineteenth to the first half
of the twentieth centuries recorded a very low growth rate of GDP per
capita, which was even negative (see Table 2.1). In contrast, it was a very
apparent trend of Great Divergence.
4 Abbot Payson Usher, A History of Mechanical Inventions (New York: McGraw-Hill,
1929).
5 Herbert Kisch, From Domestic Manufacture to Industrial Revolution: The Case of the
Rhineland Textile Districts (Oxford: Oxford University Press, 1989).

Table 2.1 Growth rate of GDP per capita around the formation of modern
countries Unit: %
1–
1000
000–
1500
1500–1820 1820–1870 1870–1913 1913–1950 1950–1973
Western
Europe
−0.03 0.12 0.14 0.98 1.33 0.76 4.05
Eastern
Europe
0.00 0.04 0.10 0.63 1.39 0.60 3.81
United
States
0.00 0.00 0.36 1.34 1.82 1.61 2.45
Latin
America
0.00 0.01 0.16 −0.04 1.86 1.41 2.60
Japan 0.01 0.03 0.09 0.19 1.48 0.88 8.06
China 0.00 0.06 0.00 −0.25 0.10 −0.56 2.76
India 0.00 0.04 −0.01 0.00 0.54 −0.22 1.40
Africa −0.01 −0.01 0.00 0.35 0.57 0.91 2.02
World 0.00 0.05 0.05 0.54 1.31 0.88 2.91
Source Angus Maddison—Contours of World Economy, 1–2030 AD– Essay in Macro-Economic History
(2007)
The Great Divergence also manifested in the change of GDP per capita.
Calculated in the 1990 international value of U.S. dollar, in the first
year of Common Era, the GDP per capita of Western Europe was 576,
and in China it was 450. By 1000 AD, it was still 450 in China, but
in Western Europe it fell to 427. In other words, in 1000 AD, China
was slightly more developed than Western Europe as a whole, because
after the collapse of the Roman Empire, Europe was divided and there
was no country there decent enough to speak of. By the beginning of
the sixteenth century, GDP per capita in Western Europe reached 771,
while in China it went up to 600. In the following 100 years, the gap
between China and Europe widened further, with China’s GDP per capita
remaining at 600 while in Western Europe it climbed up to 889. In
the next 300 years, the GDP per capita gap between the East and the
West became a huge divide (see Table 2.2). The point here is that before
modern states emerged, Europe like the rest of the world witnessed little
economic growth. As the prototype of modern states began to take shape
in the sixteenth and seventeenth centuries, the economic growth there
began to pick up and lead the rest of the world. This is no accident.
Thomas Hobbes (1588–1679), an English philosopher who lived in
that era saw this very well. In the absence of a common power to keep

24 S. WANG
Table 2.2 GDP per capita of the world around the formation of modern
countries Unit: 1990 international value of US dollars
1 1000 1500 1600 1700 1820 1870 1913
Western Europe 576 427 711 889 997 1202 1960 3457
Eastern Europe 412 400 496 548 606 683 937 1695
United States 400 400 400 400 527 1257 2445 5301
Latin America 400 400 416 438 527 691 676 1493
Japan 400 425 500 520 570 669 737 1387
China 450 450 600 600 600 600 530 552
India 450 450 550 550 550 533 533 673
Africa 472 425 414 422 421 420 500 637
World 467 450 566 596 616 667 873 1526
Source Angus Maddison—Contours of World Economy, 1–2030 AD—Essay in Macro-Economic History
(2007)
all people in awe, they are in that condition which is called war, in which
every man is against every man.6 “In such condition, there is no place
for Industry; because the fruit thereof is uncertain: and consequently no
Culture of the Earth; no Navigation, nor use of the commodities that may
be imported by Sea; no commodious Building; no instruments of moving,
and removing such things as require much force; nor Knowledge of the
face of the Earth; no account of Time; no Arts; no Letters; no Society;
and which is worst of all, continual fear, and danger of violent death; And
the life of man, solitary, poor, nasty, brutish, and short.”7 This means
that an effective state is a necessary prerequisite for economic growth and
social progress.
Adam Smith (1723–1790) lived in an era more than a century later
than Hobbes. As the popular theory goes, Adam Smith only emphasized
the “invisible hand” of the market and strongly opposed state interven-
tion, but this greatly misreads him. A careful reading of Smith’s writings
(such as Book III of The Wealth of Nations and Lectures on Justice, Police,
Revenue and Arms) will find that violence was always a focus of his atten-
tion. In his view, Europe’s economic stagnation following the collapse
of the Roman Empire was due to the rampant violence. On the one
6 Thomas Hobbes, Leviathan (Oxford at the Clarendon Press, Oxford University Press
reprinted from the edition of 1651 in 1965), p. 96.
7 Ibid., pp. 96–97.

hand, “in the infancy of society, as has been often observed, govern-
ment must be weak and feeble, and it is long before its authority can
protect the industry of individuals from the rapacity of their neighbors.
When people find themselves every moment in danger of being robbed
of all they possess, they have no motive to be industrious. There could
be little accumulation of stock, because the indolent, which would be
the greatest number, would live upon the industrious, and spend what-
ever they produced.” On the other hand, “among neighboring nations
in a barbarous state there are perpetual wars, one continually invading
and plundering the other, and though private property be secured from
the violence of neighbors, it is in danger from hostile invasions. In this
manner it is next to impossible that any accumulation of stock can be
made.”
To Smith violence was so crucial that he made this summary: “Nothing
can be more an obstacle to the progress of opulence.”8 Accordingly,
Smith concluded, “Commerce and manufactures can seldom flourish long
in any state which does not enjoy a regular administration of justice; in
which the people do not feel themselves secure in the possession of their
property; in which the faith of contracts is not supported by law; and in
which the authority of the state is not supposed to be regularly employed
in enforcing the payment of debts from all those who are able to pay.”9
In other words, an effective state is the basic premise of Smith’s political
economy; without the guarantee of an effective state, market entities are
simply unable to function properly.
Up to the years of Adam Smith, royal absolutism had prevailed in many
parts of Europe after centuries of game playing with feudal princes. A
well-known scholar on Adam Smith, Istvan Hont (1947–2013), summed
up what had happened since then this way: “The suppression of the
power of the feudal nobility led to strong central governments or, in
other words, to royal absolutism. This change coincided with the military
revolution and had two effects. The first was the emerging dominance of
Europe over the rest of the world.” This was also the Age of Discovery
and the age of expansion, the beginning of European colonial adventures.
“But because of the discoveries and the superiority of European shipping
8 Adam Smith, Lectures on Justice, Police, Revenue and Arms (Oxford at the Clarendon
Press, 1896), pp. 223–224.
9 Adam Smith, The Wealth of Nations: An Inquiry Into the Nature and Causes of the
Wealth of Nations (Chicago: University of Chicago Press, 1977), p. 1227.

26 S. WANG
and military technology, Europe also acquired a huge external market
[and used its weaponry to force especially favorable terms of trade]. The
result was spectacular acceleration of economic growth.”10
The concept of “royal absolutism” was mentioned in the above para-
graph. The concept prevailed for a long time, but John Brewer challenged
it in 1989 in his book The Sinews of Power: War, Money and English
State 1688–1783, suggesting that it should be replaced with fiscal-military
state.11 Harvard historian Nicholas Henshall also pointed out in his 1992
book The Myth of Absolutism: The Change & Continuity in Early Modern
European Monarchy that the term “absolutism” is rather misleading and
he also proposed replacing it with fiscal-military state.12 Therefore, in
the last 20 years, more and more historians have begun to use the term
“fiscal-military state” to refer to the new type of states that emerged in
Europe from the seventeenth to the nineteenth century.
Since it is called a “fiscal-military state,” it should have at least
two infrastructural state capacities: coercive capacity (military state) and
extractive capacity (fiscal state). As historian Li Bozhong put it, “fire gun
plus accounting book” was a feature of the early-day economic globaliza-
tion.13 It is exactly the political innovation of “fiscal-military state” that
has led the technological innovation and economic development in the
West.
In fact, “fiscal-military state” should be called “military-fiscal state,”
because in the perspective of historical development, the military revo-
lution preceded the financial innovation, and the financial innovation
initially served the military and war. The concept of Military Revolution
was first proposed by British historian Michael Roberts in 1956.14 After
decades of debate, most relevant scholars now agree with Roberts that in
the sixteenth and seventeenth centuries, a military revolution took place
10 Istvan Hont, Politics in Commercial Society: Jean-Jacques Rousseau and Adam Smith
(Cambridge, MA: Harvard University Press, 2015), p. 113.
11 John Brewer, The Sinews of Power: War, Mondy and the English State, 1688–1783
(Cambridge, MA: Harvard University Press, 1989).
12 Nicholas Henshall, The Myth of Absolutism: Change & Continuity in Early Modern
European Monarchy (London: Longman, 1992).
13 Li Bozhong, Fire Gun & Accounting Book: China & the East Asian World In the
Early-Day Economic Globalization (Beijing: SDX Joint Publishing, 2017), p. 392.
14 Michael Roberts, The Military Revolution, 1560–1660: An Inaugural Lecture
Delivered Before Queen’s University of Belfast (Belfast: M. Boyd, 1956).

in the West, that is, revolutionary changes were witnessed in weapons,
military organization, and scale.
This certainly was not the first military revolution in human history.
Geoffrey Parker, a famous British military historian, pointed out that the
previous military revolution was created by China’s Qin Shi Huang, or
the First Emperor of the Qin Dynasty (221–210 B.C.), which laid the
foundation for a long-standing imperial system that lasted more than
2,000 years without much change. What happened in the West was the
second military revolution. In Parker’s view, “The superior military orga-
nization of the Ch’in(Qin) enabled them to conquer all of China; that
of the west eventually allowed them to dominate the whole world. For in
large measure, ‘the rise of the West’ depended on the exercise of force.”15
Many other Western scholars have also been outspoken about the role of
violence in the “rise of the West.” For example, Charles Tilly, a famous
American scholar on state formation, put forward the following equation
in his book:
Militarization=Civilization.16
Ian Morris, a famous American scholar on history, wrote a book titled
The Measure of Civilization: How Social Development Decides the Fate of
Nations. In his view, an important dimension of civilization is the war-
making capacity. In the chapter he discussed this war-making capacity, the
first sentence is: “Nothing made Western domination of the world quite
so clear as the First Opium War of 1840-42 CE, when a small British
fleet shot its way into China, threatened to close the Grand Canal that
brought food to Beijing, and extracted humiliating concessions from the
Qing government.”17
Morris calculated the war-making capacity of the East and the West
over the past 6,000 years. Table 2.3 indicates that from 500 to 1400
AD, the East was more capable of war-making than the West. But after
the sixteenth century, the West went through the Military Revolution,
15 Geoffrey Parker, The Military Revolution: Military Innovation and the Rise of the
West, 1500–1800 (Cambridge: Cambridge University Press, 1996), pp. 3–4.
16 Charles Tilly, Coercion, Capital and European States, AD990–1990 (Cambridge, MA:
Wiley-Blackwell, 1992), p. 122.
17 Ian Morris, The Measure of Civilization: How Social Development Decides the Fate of
Nations (Princeton, NJ: Princeton University Press, 2013), p. 173.

28 S. WANG
Table 2.3 War-making capacity since 500 CE
Source Data from Ian Morris, The Measure of Civilization: How Social Development Decides the Fate
of Nations, pp. 180–181
and its war-making capacity began to surpass that of the East. By the
eighteenth century, the gap in the war-making capacity between the East
and the West was already huge. Up to the twentieth century, the West
was five times more capable of war-making than the East, with an over-
whelming superiority, and at that time, there was little doubt that the East
was beaten by the West.
Morris’ calculation did not come from nothing. In European coun-
tries where data are available, one sign of the Military Revolution was the
rapid expansion of the size of the army. Table 2.4 cites changes in the
troops and their percentage in the national population in five European
countries, which shows that from the beginning of the sixteenth century
to the beginning of the eighteenth century, both the absolute size of
the army and the troops’ percentage in national population were rising
rapidly. Throughout the sixteenth and seventeenth centuries, Spain was
the dominant power in Europe; in the eighteenth century, the leading
roles went to France and England. In other words, European countries
became greatly more capable to coerce in these few centuries.

Table
2.4
Men
under
arms,
Europe
1500–1980
Thousands
of
troops
under
arms
Troops
as
percent
of
national
population
1500
1600
1700
1850
1980
1500
1600
1700
1850
1980
Spain
20
200
50
154
342
0.3
2.5
0.7
1.0
0.9
France
18
80
400
439
495
0.1
0.4
2.1
1.2
0.9
England/Wales
25
30
292
201
329
1.0
0.7
5.4
1.1
0.6
Netherlands
0
20
100
30
115
1.3
5.3
1.0
0.8
Sweden
0
15
100
63
66
1.5
7.1
1.8
0.8
Russia
0
35
170
850
3663
0.3
1.2
1.5
1.4
Source
Charles
Tilly,
Coercion,
Capital
and
European
States,
AD990–1990,
p.
79

30 S. WANG
Gunpowder was invented in China, where also appeared the earliest
bombs, guns and artillery, several hundred years ahead of Europe, but
why did the Military Revolution take place first in Europe, not in China?
There could be many factors that played in it, yet a very crucial one might
be the frequency of wars. Every country’s history is a history of wars, but
the history of Europe is particularly bloody, with almost one war after
another. Frequent military conflicts often prompt the warring countries
to make great efforts to innovate weapons, innovate military organiza-
tions, and expand the size of armed forces, thus bringing about a military
revolution.
Someone drew the Fig. 2.3 based on historical data, where dark lines
represent China and light lines represent Europe. Analysis shows that
from 1450 to 1550, there were not many armed conflicts in China,
where the military innovation stagnated; but in the same period, military
conflicts took place frequently in the West, with one war after another,
which accelerated military innovation. By the end of the fifteenth century,
Europe was already superior to China in artillery. As one stagnated and
the other advanced, the first small military divergence came up conse-
quently. In the 200 years after 1550, the East Asian region was beset with
Fig. 2.3 Number of conflicts in Europe and China, 1450–1839 (The dotted
line represents Europe, the solid line China) t (Source Adopted from Tonio
Andrade, The Gunpowder Age: China, Military Innovation, and the Rise of the
West in World History, p. 6)

uprisings of war everywhere, forcing China in turn to learn from Europe
the technology to make advanced guns, which led to a military parity
with European countries. In the meantime, Zheng Chenggong (Koxinga)
defeated the inalienable Dutch colonists and regained Taiwan.18 But
from 1740 to 1839, China was free from warfare, where military inno-
vation halted, yet wars in Europe never stopped, leading to leaps and
bounds of military innovation. This rendered the second military diver-
gence on a larger scale.19 The outcome of this military divergence was the
First Opium War mentioned by Morris, which has become a permanent
disgrace to China.
What is noticeable here is that the timing of the Great Economic
Divergence, or more specifically, the timing of the British Industrial Revo-
lution happened to take place in the years from 1760 to 1820–1840,
almost completely coinciding with the timing of the Great Military Diver-
gence between China and the West. This is no coincidence, but because
the Military Revolution had created modern states with greater coercive
capacity, and the modern states with greater coercive capacity in turn laid
the foundation for economic growth.
Then how does the coercive capacity influence the economic growth?
From the history of Europe we could see that its role manifested in both
internal and external aspects.
Internally, the coercive capacity could help keep the “reform and
opening-up” of the time on course and create a peaceful internal envi-
ronment that Hobbes and Smith had aspired for. The first standing army
in the world came into being in the sixteenth century in Spain, which then
dominated the world. A careful reading of Adam Smith’s The Wealth of
Nations will reveal that although Chapter I of Book V is entitled On
the Expenses of the Sovereign or Commonwealth, it actually argues that
the standing army is a symbol of modern society, because “it is only by
means of a well-regulated standing army that a civilized country can be
defended.”20 Throughout Adam Smith’s lifetime, the professional police
force was yet to come into being in the world. The first dedicated police
18 Tonio Andrade, Lost Colony: The Untold Story of China’s First Great Victory over the
West (Princeton, NJ: Princeton University Press, 2013).
19 Tonio Andrade, The Gunpowder Age: China, Military Innovation, and the Rise of the
West in World History (Princeton, NJ: Princeton University Press, 2016), pp. 5–7.
20 Adam Smith, The Wealth of Nations: An Inquiry Into the Nature and Causes of the
Wealth of Nations (Chicago: University of Chicago Press, 1977), Book V, Chapter I.

32 S. WANG
force was founded in London in 1829 and it was soon introduced to
other parts of Britain and the United States and many other European
countries, with a fundamental mission to protect private property rights
from infringement.21
Externally, the coercive capacity could facilitate three actions: the first
is to plunder overseas resources, including labor resources; the second is
to open up overseas markets; and the third is to bring up management
talents.
The way to plunder overseas resources was through colonialism and
the slave trade. European colonialism lasted about 500 years, from the
beginning of the fifteenth century to the end of the nineteenth century.
Portugal and Spain were the first two to promote colonialism, who
extended their claws to Africa, Asia and the newly “discovered” Amer-
icas in the fifteenth and sixteenth centuries. In the first year or two of the
seventeenth century, Britain and the Netherlands separately established
their own “East India Company,” thereafter for more than 100 years
they and France successively established overseas colonies, with their
contention focusing on the Americas. Starting from the mid-nineteenth
century, more European countries got involved in the contention for
Africa and Asia, with Africa almost thoroughly carved up and many Asian
countries falling to be colonies.
In the rise of Europe, nearly all the European countries, large and
small, were involved in colonial plunder, including the Nordic countries
(Sweden, Denmark, Finland and Norway). Belgium, for example, had
colonies in Africa 80 times the size of its own; its colonization left a death
toll of 10–13 million people in the Congo, about half of its population,
and even if they had survived, many would have their hands chopped by
the colonists as punishment, when people with hands chopped were seen
everywhere in the Congo, the cruelty even exceeding the rule of Nazi
Germany, which is hardly mentioned today. In 1897, Belgium began to
invest in China with the money it had seized in the Congo, planning to
send Congolese soldiers to China and ship Chinese laborers to the Congo,
and it purchased several small islands in China and named them the
“Congo Free State” (Etat Independent du Congo). Someone found in
surprise among the unequal treaties signed by China that one of them was
a “Special Tianjin Chapter” in the treaty signed between China and the
21 Sam Mitrani, The Rise of the Chicago Police Department: Class and Conflict, 1850–
1894 (Campaign: University of Illinois Press, 2013).

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