China, Europe, and the Great Divergence: A Study in Historical National Accounting, 980–1850

TL;DR

Using historical national accounting, the paper estimates Chinese GDP per capita from 980 to 1840 and finds it fluctuated at a high level during the Northern Song and Ming before declining during the Qing, to about 70% of its 980 level by 1840. It argues the Great Divergence from Western Europe was already under way by the first half of the eighteenth century, before the Industrial Revolution.

Key findings

• China’s real GDP grew at 0.88% per year during the Northern Song, 0.25% during the Ming, and 0.36% during the Qing; Qing GDP per capita trended down at -0.34% per year, and by 1840 had fallen to around 70% of its 980 level.
• Northern Song China was richer than Domesday Britain circa 1090, but Britain had caught up by 1400; China as a whole was poorer than Italy by 1300, and by 1750 the gap with the leading European economies was too large to be bridged by regional variation within China.
• In 1840, Chinese GDP per capita was $599 in 1990 international dollars, or 23.76% of Britain’s $2,521 at PPP; by 1850 China was 20% of the British level. Nominal GDP in 1840 was 5,379.6 million taels, with population of 412 million and GDP per capita of 13.05 tael.
• In 1840, agriculture accounted for 66.1% of net output, industry 8.1%, and services 25.8%; by 1750 Dutch GDP per capita was 42% higher than in the Yangzi delta, rising to a 90% lead by 1770.

Methods

• Output-side historical national accounting: agricultural output from cultivated land and grain yields; industry from metals/mining, food processing, textiles/other manufacturing, and building; services from commerce, government, and housing/domestic services; combined with population to derive GDP per capita. Data are decadal for the Northern Song (980–1120), Ming (1400–1620), and Qing (1690–1840), with 1840 value-added weights from Zhang (1987).
• Sources include official historical literature (e.g., Shihuo zhi, Shilu), private histories, regional gazetteers, and secondary quantitative literature; reliability grades A–D and subjective error margins are used. International comparisons are made in 1990 international dollars, using an 1840 Fisher PPP of £1 = 2.03 tael against a silver exchange rate of £1 = 3.20 tael.
• Sensitivity analysis uses a high Yangzi delta estimate (1.75 times China-wide GDP per capita) and a low estimate benchmarked on $472 in 1850 from Shi, Xuyi, Ni and van Leeuwen (2014).

Limitations

• Paper-stated: underlying data accuracy is uncertain; official records were sometimes distorted by fiscal incentives; there are no annual grain-yield fluctuations, so decadal data are used; territorial changes are handled by excluding periods of expansion; separate time series for subsidiary agriculture are lacking; reliable wage data are absent, preventing the demand-side approach; error margins are subjective.
• Evident from the text: many component series are interpolated; urbanization has only one observation per dynasty; some series receive low reliability grades (e.g., GDP deflator D for the Northern Song, nominal GDP C); regional variation within China is addressed only through the Yangzi delta sensitivity exercise.