wright

China in the World Economy: 

China in the World Economy Tim Wright University of Sheffield

Introduction: 

Introduction Question: Was China harmed by its involvement with foreign trade and investment in the 19th and early 20th Century?

Disclaimer: 

Disclaimer Emphasise: Don’t deny negative influence of e.g. indemnities, such as Boxer indemnity

Disclaimer: 

Disclaimer Emphasise: Don’t deny negative influence of e.g. indemnities, such as Boxer indemnity Don’t deny some loss of political sovereignty

Disclaimer: 

Disclaimer Emphasise: Don’t deny negative influence of e.g. indemnities, such as Boxer indemnity Don’t deny some loss of political sovereignty But relevant question for today: Effect of participation in global trade and investment flows

Possible Harmful Effects: 

Possible Harmful Effects Destruction of China’s handicraft industries, especially cotton textiles Leading to impoverishment of peasantry

Possible Harmful Effects: 

Possible Harmful Effects Destruction of China’s handicraft industries, especially cotton textiles Leading to impoverishment of peasantry Prevention of emergence of modern industry Through unfair competition

Raise three issues: 

Raise three issues Economics not the same as politics

Raise three issues: 

Raise three issues Economics not the same as politics Issue of unit of analysis Sectoral and temporal

Raise three issues: 

Raise three issues Economics not the same as politics Issue of unit of analysis Sectoral and temporal Issue of implied counterfactual hypothesis

Economics not the same as politics: 

Economics not the same as politics Political loss of sovereignty not the same as harmful economic effect, e.g. on GDP or living standards

Economics not the same as politics: 

Economics not the same as politics Political loss of sovereignty not the same as harmful economic effect, e.g. on GDP or living standards Outrageous example:

Kailuan coal mines: 

Kailuan coal mines Illegal, basically criminal, take-over by foreign (British and Belgian) interests

Kailuan coal mines: 

Kailuan coal mines Illegal, basically criminal, take-over by foreign (British and Belgian) interests BUT: Was output lower than it would have been under Chinese control?

Kailuan coal mines: 

Kailuan coal mines BUT: Was output lower than it would have been under Chinese control? Were wages and conditions worse than they would have been under Chinese control?

Kailuan coal mines: 

Kailuan coal mines BUT: Was output lower than it would have been under Chinese control? Were workers’ wages and conditions worse than they would have been under Chinese control? Not even clear that Chinese shareholders incomes lower than they would have been under Chinese control

Kailuan coal mines: 

Kailuan coal mines Not arguing either way, except: Even outrageous and criminal swindle not necessarily, in any quantifiable way, harmful

Unit of Analysis: 

Unit of Analysis Fundamentally: Some lose out in economic change But some gain Need to look at both sides

Unit of Analysis: 

Unit of Analysis Fundamentally: Some lose out in economic change But some gain Need to look at both sides Here look at example of textile industries

Textile industries: 

Textile industries Losers Cotton spinners Replaced by factory yarn

Textile industries: 

Textile industries But winners Weavers So part of loss of employment in hand spinning made up by hand weaving

Textile industries: 

Textile industries But winners Weavers So part of loss of employment in hand spinning made up by hand weaving Consumers Enjoy cheaper and (probably) better quality textiles

Edgar Snow on Japanese Goods: 

Edgar Snow on Japanese Goods “Many Chinese necessary purchase entirely on a price basis, and here few native products can compete with the foreign article – usually better in quality, also. The price margin is decisive for the average impoverished Chinese and the ingredient of patriotism cannot enter into it at all. It is generally a question of buying Japanese—or not buying!”

Textile industries: 

Textile industries But winners Weavers Consumers People in other industries who gain from international trade

Textile industries: 

Textile industries People in other industries who gain from international trade Alvin So’s calculations 58600 jobs lost among Guangdong cotton spinners during 1870s

Textile industries: 

Textile industries People in other industries who gain from international trade Alvin So’s calculations 58600 jobs lost among Guangdong cotton spinners BUT: 59400 jobs gained by farmers working in silk export industry

Textile industries: 

Textile industries One final point: Silk industry Need to balance Decades of prosperity in Jiangnan and Guangdong because of silk exports

Textile industries: 

Textile industries One final point: Silk industry Need to balance Decades of prosperity in Jiangnan and Guangdong because of silk exports Poverty and misery portrayed by Fei Xiaotong in the context of the Great Depression

Textile industries: 

Textile industries One final point: Silk industry Need to balance Decades of prosperity in Jiangnan and Guangdong because of silk exports Poverty and misery portrayed by Fei Xiaotong in the context of the Great Depression No single right answer, but need to look at both sides

Textile industries: 

Textile industries Should not just focus on losers, also look at winners

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? If talk about impact e.g. of foreign trade. NOT an issue of what happened after growth of foreign trade in comparison with what happened before

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? If talk about impact e.g. of foreign trade. NOT an issue of what happened after growth of foreign trade in comparison with what happened before BUT of comparing what happened with foreign trade with what would have happened in some situation without foreign trade.

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? What that situation would have been is a very complex question. Just time for one example

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? Pomeranz: Area along Grand Canal declined because Chinese government’s attention diverted to coastal areas by imperialist aggression

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? Pomeranz: Area along Grand Canal declined because Chinese government’s attention diverted to coastal areas by imperialist aggression Therefore decline of those areas the result of imperialism

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? BUT In what situation would what kind of Chinese government not have switched their attention to the coast?

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? Argument: Any Chinese government involved in articulating with world and world economy would inevitably focus on the coast at the cost of the interior. For example reform government under Deng Xiaoping

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? So, what if they had cut themselves off from the world economy?

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? So, should they have cut themselves off from the world economy? BUT, this also involves very serious costs:

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? So, should they have cut themselves off from the world economy? BUT, this also involves very serious costs: Costs of China’s small involvement in foreign trade under Mao

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? So, should they have cut themselves off from the world economy? BUT, this also involves very serious costs: Costs of China’s small involvement in foreign trade under Mao Costs of Third Front investment

Implied Counterfactual Hypothesis?: 

Implied Counterfactual Hypothesis? Again, no easy answer. But need to examine: Plausibility of counterfactual hypothesis (could China have remained isolated in any circumstances)_ And cost of alternative (costs of isolation)

Conclusion: 

Conclusion No easy answer either way Core argument: Cannot approach this problem on basis of isolated examples of losers (or of winners) from world economy This as true nowadays with globalisation as in the 19th and early 20th centuries