Li: A GDP study of the early modern Yangzi Delta The area and period Understanding our Past, Informing our Present: A GDP study of the early modern Yangzi Delta Bozhong Li Hong Kong University of Science and Technology Paper presented to CAGE Conference on Accounting for the Great Divergence The University of Warwick in Venice, Palazzo Pesaro Papafava Venice, Italy 22-24 May 2014 I. The golden opportunity for and the grim reality of Chinese economic historiography II. A new approach: the GDP study of pre-modern economy III. The study of the GDP of the Huating-Lou area of 1823-29 IV. The major findings V. The Yangzi Delta: an early modern economy in East Asia in a global perspective In the past decade, I have been working on a study of China’s early modern economy before the West arrived in the mid-nineteenth century, by means of reconstruction of the GDP of the Yangzi Delta in the beginning of the nineteenth century. The major results of the study have been published.1 This paper, in some sense, summarily presents the study. I. The golden opportunity for and the grim reality of Chinese economic historiography During the past three decades, China’s economy has experienced a great transformation which is rarely seen in terms of speed and scale in world history. Understanding this economic miracle is impossible without some knowledge of China’s long-term economic past. This gives Chinese economic historians a great opportunity to look afresh at China’s 1 They mainly include: Li 2010, 2012A, 2012B and forthcoming. 1 Li: A GDP study of the early modern Yangzi Delta The area and period economic past, in particular China’s real economic situation during the centuries before the arrival of the modern West in the mid-nineteenth century. These centuries is also called China’s early modern times.2 Views on this theme are highly divergent in previous scholarship. At one extreme, some scholars assert that the Chinese economy had fallen into unending and ever-deepening “involution” well before the mid-nineteenth century. At another extreme, other scholars hold that the Chinese economy had performed so well that an indigenous capitalism, or “Chinese capitalist sprouts,” had been well under way in the late imperial period. This debate has been going on for nearly a century, but is still far from over; just the contrary, it is intensified by the recent row regarding the claim of a “Great Divergence” between China and Europe around 1800, and will surely continue to be a focus of scholarly discourse about China for a long time (Pomeranz 2000). This is compounded by the widespread availability of data for economic history of early modern China. Since historical materials are the basis of historiographical research, the availability of the materials often determines the research. This high dependence of the study of economic history on the sources has been highlighted much more in our era of “data explosion”. With more and more new (or previously unknown) materials being discovered, and the amounts of the sources available for the economic historians become surprisingly huge today and they are still increasing at an inconceivable speed.3 Moreover, with the rapid advance of information and digital technology, great amounts of historical materials are open to almost all scholars.4 Since these materials could be used only by very few scholars before. they can be regarded “new” to the majority of historians. The use of the new materials has led, and it is pretty sure that it will continue to lead, to more new explanations of the past.5 2 The term ‘early modern times’ is used mainly in European history. It usually covers the period between 1500 and 1800, more or less corresponding to the Ming and Qing dynasties of China (actually the latter half of the Ming dynasty and first half of the Qing), a periodization often encountered in China’s economic histor. For this reason, ‘early modern times’ is used to denote the period between 1550 and 1850 (Li 2000B). The term ‘modern times’ also originated in the West. When used in this book, it refers to the nineteenth century in the Western European (especially Dutch) context, and the twentieth century in the Chinese context. 3 One example is a great number of original business documents (deeds, contracts, leases and so on) on rural areas which were produced during the period from the mid-sixteenth to the mid-twentieth centuries have been discovered recently in the remote Qingshui River 清水江 Valley in Guizhou, Southwest China, which a total which is estimated between 300,000 and 500,000 pieces. These documents have never been known before. 4 For example, the First Historical Archives of China in Beijing is carrying out an ambitious program of the Qing Archival Documents Database 清代档案文献数据库 to digitize more than 10 million pieces of archival documents of the Qing government and royal house which are stored in the archives. A great part of the job has been finished and can be easily used. 5 In fact, based on the newly discovered materials, a few significant new explanations, some of which are really 2 Li: A GDP study of the early modern Yangzi Delta The area and period All these are great opportunity to economic historians who should feel excited and encouraged. But the reality is somehow disappointed: the discipline of Chinese early modern economic history has manifested an ominous downward tendency after it reached its “Golden Age” in the 1980s and early 1990s. In 1991, in her review of the international scholarship of Chinese history, Evelyn Rawski summarized: “Ming-Qing [early modern times in Chinese history] socio-economic history is thriving. In terms of publication volume and the number of active researchers, it is probably the single largest specialization in the field of Chinese history.”6 Two decades later, however, a conference was held in Taipei, with a name of “the Forum of the Study of Ming and Qing China at a Crossroads.”7 Since economic history has been occupying an extreme important position in Chinese historiography (Li 2008), the plight that the study of Ming-Qing China can be seen the epitome of Chinese historiography. The sharp contrast of the situations in which the discipline was two decades ago and in the present day raises a question: What has happened in the discipline of Chinese economic history during the two decades? One of the underlying causes of the decline of Chinese economic history, in my opinion, lies in the nature of history. Among all branches of knowledge or academic disciplines, history may be the oldest one, which is commonly defined as "the study of the way history has been and is written – the history of historical writing" (Furay & Salevouris 1988: 223). Perhaps because the object of research of this discipline is the human experience in the past, which did happened and has not changed since it took place, many people believe that this discipline also has for a long time remained largely unchanged. However, as Christopher Hill wrote: “History has to be rewritten in every generation, because although the past does not change, the present does; each generation asks new questions of the past and finds new areas of sympathy as it re-lives different aspects of the experiences of its predecessors”(Hill 1991). I think that Hill is right, although he ignores some other reasons of why history has to be rewritten. For each generation, not just new questions are asked, but the materials and methods with which history is written also change: the discovery of new materials and invention of new methods make new interpretations of the past to be possible and necessary. This issue is not the central concern of this article. Here I just want to emphasize: it is really revolutionary or subversive to the conventional wisdom, have been produced. One example is Lee and Wang 2000, which based on their analysis of a large quantity of primary records, overthrew one of the long-standing assumptions in Chinese studies: the Malthusian Paradigm. 6 Rawski 1991. This review is limited to materials in French, English, Japanese, and Chinese covering the period 1500-1840. This review does not cover institutional, political, or intellectual history, nor does it treat the voluminous literature on popular uprisings, ably surveyed by Wakeman 1977. 7 This forum was organized by The Committee for Promotion of the Ming-Qing Studies of Academia Sinica and held in Academia Sinica on December 14, 2012. 3 Li: A GDP study of the early modern Yangzi Delta The area and period the time of change for the discipline when it is facing more and more challenges. Since I have been working in early modern economic history of the Yangzi Delta, I’d like in this paper to address this issue from the field. The Yangzi Delta under this study,8 or Jiangnan area in Chinese, has been the most economically advanced area of China in the past millennia (and of East Asia before the rise of modern Japan in mid-nineteenth century). More recently, the failure of the delta to produce its own modern development makes it one of the leading roles in the story of “the Great Divergence.” No wonder that it has been under the very intensive study in the past century in China, Japan and the West. As a result, we have much better knowledge of early modern economic history of this area than of any other parts of China. Yet in the previous scholarship no consensuses have been reached even in most basic points of view of the general economic state of the early modern Yangzi Delta. The delta had been seen “the richest area in the world” (fu jia tianxia) in Chinese literature which was also convinced by foreign observers who visited this area before the Taiping Rebellion.9 But the view changed greatly in the twentieth century. In most of the century, most Chinese historians believed the delta was so poor that the majority of the people who was living in this area lived in an extreme poverty.10 This point of view is shared by China scholars in the West, though “population pressure,” not “feudal exploitation,” is regarded the chief culprit behind the pauperisation.11 In the late 8 The delta is also spelt as the Yangtze delta in the Wade-Giles spelling system. 9 For example, Isidore Hedde, who visited the Yangzi Delta in 1843 as a member of a French trade mission to China, wrote in his, he called Suzhou, the center of the delta, “the largest city in the world,” “the source of arts and crafts of superb taste and of national fashion.” He emphasized that “this city is the capital of Jiangnan (i.e. the Yangzi Delta and neighboring areas) which is called ‘the country of tea and silk’. It is not only the queen of arts and fashion, but most active industrial center and most important commercial center and distributing center of goods. In short, it is the paradise on earth” (Hedde 1959 [1842]). It is worth noticing: this is an impression from a sharp eye of a businessman from Paris, one of the wealthiest cities and the fashion leader of the West. 10 Most Chinese historians of older generations believe that the “feudal exploitations” (i.e., rents, taxes, usury loans, and the like) were so severe that most peasant families could hardly survive if they had relied only on farming. Even when they found new sources of income from textile handicrafts, they still lived at a minimum level of living. For example, Chen Zhenhan (1955) argued that “rents did take not only all the surplus labors of peasants, but also most of their necessary labor. As a result, what peasants owned could not maintain their bodies. Bai Gang (1984) also suggested that “landlords used rents, commercial profits, and interests of usurious loan to exploit the products of peasants’ all surplus labor and necessary labor, and hence lowered their standards of living to the lowest level needed for survival.” 11 They believe that the pressure created a growing surplus of labour which led peasants’ living standards to a ‘minimum subsistence’ level. Even worse, the living standards in the delta had been falling during the period between the mid-thirteenth and late twentieth centuries. The more recent representative of this theory is Philip Huang’s “agricultural evolution.” The basic idea of “involution” in the Yangzi Delta was put by Huang in this way: “[During the six centuries before the 1980 reform, there was no] improved productivity or income per unit labor. Despite the vigorous commercialization of the Ming and Qing, small-scale family farming near subsistence levels persisted down to the eve of the 4 Li: A GDP study of the early modern Yangzi Delta The area and period twentieth century, however, this consensus was questioned by a few leading scholars such as Jacque Gernet and Ping-ti Ho, who suggested that the Chinese lived quite well when compared with their counterparts in the major countries of early modern Western Europe or Togukawa Japan.12 Since the people who were living in the Yangzi Delta enjoyed the highest standards of living in China, there would be no doubt that they did better compared with their counterparts in most other parts of the world.13 The two views conflict so sharply that one can’t know what the economy of the delta was really, in spite that the huge numbers of works on early modern economic history of the Yangzi Delta have been published. This situation reflects how serious the crisis is which Chinese economic history has been suffering from in the past decades.14 One thing is clear: we must face up to the challenges caused with the problems and have to seek for new approaches if we want to have Chinese economic history emerge from the low ebb at which the discipline is at now. II. New approach: the GDP study of pre-modern economy Why are the general views of the early modern economic performance of the Yangzi Delta so diverse and, in many cases, so polarized? Some may attribute it to the recent “data explosion,” because many new explanations based on the use of the new materials are subversive to the conventional ones. But this “data explosion” should not be the first important cause. China is one of the few countries in the world where the performance of a pre-modern economic sector can be studied over an extended length of time because of China's great historical tradition. The records are so rich that it is not difficult for historians to find some evidence to support their points, no matter how novel or even bizarre the points are. Moreover, though new materials come more and more, but for some areas such as the Yangzi Delta of Revolution. … Subsistence farming persisted with no significant improvement in labor productivity,” “agricultural output expanded enough to keep pace with dramatic population growth, but chiefly by intensification and involution. Productivity and income per labor day either stagnated, as in intensification, or shrank, as in involution” (Huang 1990: 5, 12). I have questioned this theory (Li 1996). 12 Jacque Gernet (1999: 483) argued that “The Chinese peasant of the Yongzheng reign (1723-35) and the first half of the Qianlong reign (1736-95) was, in general, much better and much happier than his equivalent in the France of Louis XV. He was usually better educated.” Similarly Ping-ti Ho (1989: 194) also suggested that there was a tendency of improvement of standards of living in China in the eighteenth century. The income of the Chinese peasant was not lower than that of their counterparts in France and surely higher than those in Prussia and Japan in the same period. 13 My own detailed research on food consumption (Li 2007) also demonstrates that in the Yangzi Delta, the living standards were pretty high in the early nineteenth centuries which reached the late twentieth-century international level. 14 The crisis is not unique to Chinese economic history. Rather, it is a reflection of the “paradigmatic crisis” in Chinese history (Huang 1991). But the “paradigmatic crisis,” it seems to me, is a “methodological crisis” in some sense. 5 Li: A GDP study of the early modern Yangzi Delta The area and period the early modern times, the newly discovered materials are actually not very many; we still have to build our research on the materials most of which have been known or used for long time. Therefore, what should be responsible to the situation is not the sources, but the methods which we use in our research. There are many ways to study economic history and each way has its own particular usability with its irreplaceable importance. Different methods are used in the study of early modern economic history of the Yangzi Delta in the previous scholarship, but serious problems which exist in the methodologies lead to misunderstandings and misconceptions that finally to the confusion in the perception of early modern economic history of the Yangzi Delta mentioned above (Li 2000A and 2001). One of the problems is that the overwhelming majority of the scholars focus only on some particular aspects of the economy. With these aspects, some two-dimensional pictures of the economy as a whole have been pieced together and, based on these pictures, general conclusions are drawn up.15 But how these aspects were connected with each other and integrated into a single entity is little concerned about. As a result, we don’t really know what the economy looks like as a whole. An economy, just as any actual object, is three-dimensional in a physical sense, consisting of different parts which are well-organized and structured according to certain proportions and proper relations among the parts. In spite of the huge efforts made, therefore, such a three-dimensional picture of the early modern Yangzi Delta has not been produced so far. The major reason is that the methods used in previous studies were inadequate. Accordingly, we have a pressing need for new methods. To work on the disadvantages and shortcomings, it is necessary to introduce new methods. One of the most needed methods is basic quantitative measurement, which, very unfortunately, is seldom accepted by the majority of historians in China. Only with the help of these tools, can we know what the amounts, sizes and scales of different parts of an economy really are. Based on the knowledge, it will be possible to know what the relationships among all the parts of the economy are and how they are linked each other. Without these standards, criteria and indices, the picture of an economy pieced up will be questionable in terms of objectivity and reliability as it is often seen in the previous studies. Moreover, only using quantitative method, can we establish a suitable and universal set of standards, criteria and indices to measure the economy and to compare with other economies. 15 This is often seen in the textbooks and large-volume works of Chinese economic history. In the books, the economy is categorized into sectors (mainly agriculture, manufactures and commerce), institutions, systems, population, resources, etc, and each issue is given one chapter or section. Then the book is concluded with some quite general statements, such as “economic revolutions” of the middle imperial times and “economic stagnation” of the late imperial times. In this sense, therefore, the Chinese economic history has operated in self-contained compartments. 6 Li: A GDP study of the early modern Yangzi Delta The area and period GDP is one of the major objects of quantitative research. As an indicator reflecting the gross value of economic activities, GDP provides a more complete picture of the economy than any other indices that describe a certain branch of the economy. Also, given that GDP measures the added value created by all branches of the economy, there is less double counting compared to indices that measure gross value. Besides, GDP does not use accounting methods such as cost, profit, and so on, which means there is less ‘flexibility’ in calculation. Comparatively speaking, GDP is a more objective indicator.16 For this reason, GDP is adopted by all countries and is the most widely used economic indicator. One of the main advantages of the GDP study is that it has built up a complete set of standards, criteria and indices to measure the performance of an economy of a certain area within a certain period of time. These indices are interconnected and form an integrated whole, presenting the economic situation of different sectors and the relationships between them. These standards, criteria and indices are comparatively objective and neutral, and can be applied to different regions and periods, which means that the circumstances of different economies can be compared using the same yardstick. Therefore, studying the GDP of a particular region in a particular period not only allows us to get a “three-dimensional” picture of the economic performance in that time and space, but it also allows more comprehensive and objective comparisons across different regions in the same period of time or the same region at different times. The conclusions reached by these comparisons are obviously more complete and objective than previous comparisons based mainly on economic systems and individual economic sectors. It is this “universal” nature of the GDP study that makes it very helpful to create a more integrated and complete picture of some pre-modern economies such as that of the early modern Yangzi Delta. The study of GDP of pre-modern China is not new, which can be traced to half century ago when Chung-li Chang made an estimate, though very simple and rough, of the GDP of China of the late nineteenth century.17 Recently, some scholars such as Liu Ti ((Liu 2009), Guan Hanhui and Daokui Li (Guan & Li 2010) made their estimates of the GDP of late imperial China. But their works suffer greatly from their own problems.18 16 There are some problems with using GDP as an indicator of the economic situation, and there is growing criticism of its use in recent years. Despite its inadequacies, GDP is still the best compared with other indices that calculate the total economy. 17 Chang 1962. A little later, Dwight Perkins made an analysis of China’s agricultural output in the six centuries since 1368 (Perkins 1968). This work comes quite close to GDP studies, but, unfortunately, only focuses a sector of the economy-agriculture. 18 The major sources in the two works are the official figures of population, cultivated land, taxes and so on recorded by the imperial state of the Ming and Qing dynasties. Many scholars have warned that these figures are not reliable and full of biases and mistakes in many cases. Moreover, the two works cover a centuries-long time temporally and the whole country 7 Li: A GDP study of the early modern Yangzi Delta The area and period Besides their own particular problems, these studies flaw methodologically. More specifically, none of them has tried to apply the System of National Accounts (SNA) in their studies, but the SNA is crucial in reconstructing GDPs. They didn’t do because the SNA is usually used only in the study of a modern economy, not a pre-modern one. Theoretically, the SNA can be used in the study of past economies. However, obvious problems will be encountered if we use the SNA in historical research. The main problems are: (1) the SNA emphasizes market sectors; it only calculates transactions that are made using currencies and ignores the ‘traditional’ non-market sectors; (2) the SNA emphasizes the integration levels of national economies; in its calculations of national incomes it only takes into account national economies that are integrated; (3) national incomes are not good indications of wellbeing; (4) there are insufficient statistical data from the nineteenth century and before to construct national accounts (Smits, Holings & van Zanden 2000: 4–10). Due to these problems, it is only very recently that the SNA is used in pre-twentieth century economic history. Angus Maddison, one of the pioneers in the use of the SNA methods in pre-modern GDP studies, was also the first person who calculated China’s GDP of different periods over the last 2,000 years in a context of global comparison.19 However, due to various limiting circumstances, his pioneering work contains unavoidably certain problems.20 In the study of GDP of early modern Europe using the SNA methods, great advances have been achieved. The methods have been improved in the study, in particular by Jan Luiten van Zanden and his research team who have conducted a groundbreaking and in-depth study of the GDP of the Netherlands in the early modern era (van Zanden 2002; Smits, Holings & Zanden 2000). They successfully came out with the concept of the Historical System of National Accounts (HSNA), laying the foundations for applying the SNA in pre-twentieth century economic research. Their research has provided a good help to scholars in who are trying to study early modern GDPs of other parts of the world. My study of GDP (Li 2010) is inspired greatly by spatially. But as Dwight Perkins suggested, China is a large and diverse country, a period of centuries is long, and the sources used are themselves great in number and variable in quality (Perkins 1968: 10). Therefore, the better method, it seems to me, is to carve out a narrow segment of China’s economy in terms of area and time as the object of our GDP study in this stage. Only based on the results of the studies of major areas of China, can a valid and meaningful study of the national GDP be possible. 19 The results are in Maddison1998/2007. 20 Given that Maddion’s research relies entirely on Western literature on China’s economic history and his GDP calculations are based on the assumption of a constant per capita consumption in a long period of one millennium from the Song to the mid Qing (970-1820 AD), some of his results are problematic. Some scholars have totally rejected Maddison’s conclusions, but, in my opinion, his studies have opened up a whole new area of research and his contribution should not be denied. 8 Li: A GDP study of the early modern Yangzi Delta The area and period their works. III. The Study of the GDP of the Huating-Lou Area of 1820s My study of the GDP of the Huating-Lou Area of 1820s aims to provide a relatively complete and concise description of the economy of the Yangzi Delta in the early nineteenth century from a comparative perspective. My intention is to experiment with comparative methodology through a selected focus on the Huating-Lou area of the period of 1823-29 first. In the future, the same approach will be applied to the study of a larger region and for a longer period if the experiment is successful. 1. The area and period The area of Huating-Lou area is located in the eastern part of the Yangzi Delta. Geographically, it roughly corresponds to modern Songjiang County in Shanghai Municipality. Administratively, this area was divided into the two counties of Huating and Lou under the jurisdiction of Songjiang Prefecture after 1725. The land area of the Huating-Lou area, about 600 square kilometers, had not changed much during the two centuries between 1725 and 1949.Three administrative units, one prefectural (Songjiang Prefecture) and two sub-prefectural (Huating and Lou Counties), shared the same city as their capital administration seat. The population of the area was reported as 563,052 in 1816. Since there are no statistics available for the 1823-29 population, I use the 1816 figure as the proxy. Accordingly, the density of the population of the area was above 900 people per square kilometer, which made this area rank among the most populous areas in China of the day. As the heart of Songjiang Prefecture, the area had a very important place in the Chinese economy because it had been the center of the Chinese textile industry for centuries. The period under study, 1823 -1829, was the beginning of a great climatic change that raged over eastern China for half a century. The chief landmarks of the change are the floods of 1823 and 1829 (Li 2007). The period was also the beginning of the century-long decline of the economy in most parts of China. Before then, China had enjoyed prolonged economic prosperity, but after then, in stark contrast, its economy performed extremely poorly. The turning point is around 1820, which is seen as the beginning of the Great Depression (Wu Chengming 2001: 241). In short, 1823 through 1829 were the first years of the century-long climatic and economic deterioration in this selected area of the Yangzi Delta, and in China at large. 2. Methods To achieve a more complete and comparable picture of the economy of the Huating-Lou 9 Li: A GDP study of the early modern Yangzi Delta The area and period area in the 1820s with the Netherlands case in mind, the GDP approach is very helpful. The approach has some advantages over other approaches. First, though the GDP analysis is only one method to measure the size of an economy, it surely provides us with a more complete picture of the economy. Second, because the methods of GDP studies are quite elaborate and standardized, they can provide a coherent macroeconomic framework covering the whole economy. Third, since GDP methods are “universal” in some sense, they can be used widely and consistently, and there can be confidence that the same thing is being measured in each area and period. This study is the first attempt to apply the methods of GDP studies to Chinese economic history prior to the twentieth century. The major methods used here are roughly what are used in measuring GDP today, which include the three major approaches: production, expenditure, and income. These approaches are all applied in this study, but the production approach is the major one. 3. Sources A good reason that the area of Huating-Lou and the period of 1823 -29 were chosen for this study is that good data are available regarding this time and place, which allow us to conduct a GDP study in the pre-modern Chinese context. Being one of the most economically and culturally accomplished areas of China, Huating-Lou has abundant local literature of the past,21 which contains valuable information on the local economy dating to the beginning of the nineteenth century and beyond. An important feature of this study is that it makes use of a wide range of materials from many different kinds of sources. I have relied principally on three types of materials: local histories or gazetteers, agricultural handbooks, and modern field investigations. (1) Gazetteers The Hua-Lou area and the Songjiang Prefecture, the upper administrative unit the area belonged to, had a long tradition of producing gazetteers. Compared to those compiled in most other locales in China, the gazetteers produced in Songjiang Prefecture are superior in both quantity and quality. Among them, seven are most closely connected to this study.22 21 As one of the economically and culturally richest areas of China, this area has boasted its abundant local literatures which contain valuable information on the local economy. For example, only in the Huating-Lou area in the delta which area under my study, there are a total of 242 different gazetteers produced in the original Songjiang Prefecture before 1949: one city gazetteer, 14 prefecture gazetteers, two department gazetteers, 85 county gazetteers, five garrison gazetteers, two sub-prefecture gazetteers, and 133 village, township, and office/station gazetteers. If one includes writings on local topics like specialized gazetteers, collections of literary writings, private records, and so on, the total number would be much larger. The Shanghai fangzhi ziliao kaolu, compiled by the Shanghai Normal University Library, collected over 840 writings on local data produced before 1949. For more details, see Xu Hongxin: Shanghai jiu fangzhi shuping. 22 We have consulted seven local gazetteers of the area in question: Jiaqing Songjiang fu zhi 嘉慶松江府志 (1818), 10 Li: A GDP study of the early modern Yangzi Delta The area and period These gazetteers contain abundant information on the local economy during the late eighteenth and most of the nineteenth century. In addition, information on the Huating-Lou area is also kept in gazetteers of the neighboring areas. (2) Agricultural handbooks One of the important characteristics of traditional society of the Yangzi Delta was that its scholars were deeply involved in local affairs. For this reason, they left behind many records relating to the local economy in their private writings. As early as in the late ninth century, the Songjiang scholar Lu Guimeng wrote Leisi Jing (Book of tillage implements), the first important writing on the curve-beam plow in China’s agricultural history. In the pre-modern times, the interest in local economic activities grew more and more strongly. Some of them recorded their observations of practices and performances of local economy in details in their writings, which are very useful to our study. Of these writings, the most important are “agricultural handbooks,” which deal directly with agriculture—not only farming practices, but also other aspects of the rural economy. The most valuable source of the materials crucial to this study is an agricultural handbook titled Pumao nongzi (A report on agriculture in the Huangpu River and Mao Lake area) dated 1834, which carries rich and firsthand information on the rural economy of the Huating-Lou area from 1823 through 1834, with a considerable amount of quantitative data. The book was written by Jiang Gao, a local scholar who had a special interest in agriculture. The book is packed with information on the rural economy at the time, and the reports given are detailed, full, and accurate. What is even more commendable is that the author conducted field surveys and interviews with farmers in the course of writing this book. (3) Modern field investigations In the twentieth century, several modern field investigations were conducted in this area and neighboring areas, both by Chinese and by foreigners. The major results of the Chinese investigations that relate to this study are available in the 1991 edition of the Songjiang xian zhi and other twentieth-century gazetteers of the neighboring areas. Among the investigations carried out by foreigners, the surveys made by the Japanese South Manchurian Railway Company from 1937 to 1941 provide the most precise and detailed body of information available on the society and the economy of the Huating-Lou area in the first half of the twentieth century. 4. Data issues Though they contain rich information of economic history, these materials cannot be used Guangxu Songjiang fu xuzhi 光緒松江府續志 (1884), Qianlong Huating xian zhi 乾隆華亭縣志 (1791), Guangxu Huating xian zhi 光緒華亭縣志 (1879), Qianlong Luo xian zhi 乾隆婁縣志 (1788), Guangxu Lou xian xu zhi 光緒婁縣 續志 (1879), and Songjiang xian zhi 松江縣志 (1991). 11 Li: A GDP study of the early modern Yangzi Delta The area and period in the GDP study if two problems are not solved. First, GDP is the market value of all final goods and services produced within a region in a given year. In a pre-industrial economy, however, many activities are nonmarket, but they are still considered part of national income. Therefore, a value must be calculated even when the good or service has no actual market price. Second, though the Yangzi Delta has rich local literatures of various sources which are better both in quality and quantity than all other parts of the country, the data from these sources are far from ideal for the purposes of the GDP study. No constant and reliable economic statistics are available for the area and period under study. There are many key gaps in the materials, both quantitative and qualitative, and much of the information can also be questionable. Moreover, much of the information which contains in these data is not particularly reliable. The first problem is actually not very serious. Though the economy of the Yangzi Delta in the period under the study was still a pre-industrial one, it cannot be ignored that by the early nineteenth century, a comparatively developed market had been the hub of the economic activities in the area. Almost everything, including major productive factors could be (or had to be, in many cases) acquired from the market. For this reason, many crucial items of goods and services had their market prices which were recorded in local literatures such as Pumao nongzi. The second problem is a really serious one. To solve it, I took the following strategy: First, I have combed the useful information as much as possible out of a wide range of materials from different kinds of sources, in which the first-hand records were kept. Each and every item of information was collected with careful consideration of the use to which it is to be applied. Since the useful data are fragmentary and sporadic in primary sources and there are gaps within the data, I have to take some measures to “invent” estimates by means of assumption, inference and verification to fill the gaps and make the data complete. The next step is to test the consistency of the data, either original or “invented.” The data are evaluated not just on the basis of their internal consistency, but also in relation to those which come before and after, to eliminate errors. In other words, judge the quality and validity of the information on whether they are consistent with those from the materials of the earlier and later periods or from the materials of the neighboring areas, with historical development in the intervening periods and areas. It is understood from the beginning that the methods through which the data were generated, the associated complexities, and the primary factors all contribute to their uncertainties and potential misinterpretations. Once collected, validated and verified, the data were categorized as series according to the issues of the study such as prices, prize, wages, inputs, outputs, incomes, taxes, 12 Li: A GDP study of the early modern Yangzi Delta The area and period government expenditures, etc, and in such a way that they can be readily accessible. Even then, it is still needed to re-check the relationship within the certain series, as François Furet put: “Documents and data exist no longer for themselves but in relation to the series which in each case precedes or follows: it is their comparative value which becomes objective instead of their relation to some elusive ‘real’ substance” (Furet 1971). IV. The Major Findings Some findings are reached in my study, which, if they prove true, may shed important light on our knowledge of the Chinese economy before the mid-nineteenth century. Using the production approach, I have worked out the values added in major sectors of the Huating-Lou economy in the years 1823–29. From table 1, we can see that the GDP was around 13 million taels of silver per year. Table 1. Value Added, in the Huating-Lou Area, 1823–29 Value Added Percentage (1,000 silver taels) Primary Sector agriculture 4,002 30 fisheries 166 1 total primary 4,168 31 546 4 textile 1,270 9 “manufacturing”** 2,666 20 4,482 33 1,727 13 service 277 2 finance 486 4 external trade 907 7 water transportation 251 2 education 358 3 government 843 6 4,849 36 Secondary Sector “ordinary”* total secondary Tertiary Sector commerce total tertiary 13 Li: A GDP study of the early modern Yangzi Delta The area and period GDP 13,500 100 Source: Li 2010: 247, table 12-1. Note: 1 tael (liang 兩) equals approximately 37.3 grams. * The “ordinary” sectors include tailoring, hardware making, carpentry, plastering, and so on. ** The “manufacturing” sectors include rice husking, wine brewing, oil pressing, construction, salt making, boat building, brick and tile kilning, and so on. The results I arrived at with the approaches of income and expenditure are in tables 2 and 3. Since the maximum difference of the three results is within 4 percent, we can conclude that the GDP of the Huating-Lou area per year from 1823 to 1829 was around 13,500 taels of silver. Because the population of the area was around 560,000, the GDP per capita was about 24 taels of silver. Table 2. GDP (Income Approach) of the Huating-Lou Area, 1823–29 Income Percentage (1,000 silver taels) Wage 8,271 61 Rent 1,468 11 366 3 2,670 20 759 6 13,534 100 Interest Profit Depreciation GDP Source: Li 2010: 251, table 12-4. Table 3. GDP (Expenditure Approach) of the Huating-Lou Area, 1823–29 Expenditure Percentage (1,000 silver taels) Private consumption 12,330 90 Government consumption 875 6 Fixed capital formation 759 6 Net export -229 -2 13,744 100 GDP Source: Li 2010: 250, table 12-3. 14 Li: A GDP study of the early modern Yangzi Delta The area and period I have also worked out estimates for employment. Its distribution by sector in the Huating-Lou area from 1823 to 1829 is in Table 4. The sectors are divided as primary, secondary, and tertiary following common practice in economics. Within the primary sector, there are two forms of employment, i.e., agriculture and fisheries; within the secondary sector: ordinary, textile, and manufacturing; whereas in the tertiary sector there are commerce, service, banking, external trade, water transportation, education, and government. Table 4. The Structure of Employment in the Huating-Lou Area, 1823–29 Employment Percentage (1,000 “full-time” adult workers) Primary Sector agriculture 68,000 26 fisheries 3,100 1 total primary 71,100 27 “ordinary” 13,300 5 textile 113,000 43 “manufacturing” 22,200 8 148,500 56 commerce 18,400 7 service 6,600 3 banking 5,000 2 external trade 1,200 2 4,300 2 education 4,000 2 government 3,800 1 total tertiary 43,300 16 Total 262,900 100 Secondary Sector total secondary Tertiary Sector water transportation Source: Li 2010: 219, table 9-7. The volumes of the internal and external trade, the major exports, and the balance of payment in external trade are summarized in tables 5, 6, and 7. The volume of external trade accounts for 27 percent of GDP. 15 Li: A GDP study of the early modern Yangzi Delta The area and period Table 5. Trade in the Huating-Lou Area, 1823–29 Volume Percentage (1,000 silver taels) Urban-rural 5,020 45 External 3,670 33 Within rural areas and 2,490 within urban areas Total 11,180 22 100 Source: Li 2010: 425, table app. 10-7. Table 6. Major Imports and Exports in the Huating-Lou Area, 1823–29 Export volume Import volume (1,000 silver taels) (1,000 silver taels) 42 0 1,432 0 Soybean 0 936 Raw cotton (ginned) 0 625 Salt 63 0 Total 1,537 1,561 Rice (husked) Cotton cloth (blank) Source: Li 2010: 423, table app. 10-6. Table 7. Balance of Payment, in the Huating-Lou Area, 1823–29 Volume (1,000 silver taels) Import 2,110 Export 1,560 Total 3,670 Balance -550 Source: Li 2010: 424. From these tables, we can observe the following situations. First, agriculture accounted for only 30 percent of the economy of the Huating-Lou area from 1823 through 1829, both in terms of GDP and of labor force, while the shares of industry and services were considerably higher. This is sharply contrary to the perceived view 16 Li: A GDP study of the early modern Yangzi Delta The area and period that agriculture constituted the bulk of the Chinese pre-modern economy. Second, land rent accounted only for one-eighth of national income in this area during the period under study. This calls into question the long-held view that this factor had been the most important component of national income, without exception, in pre-modern China. Third, the volume of external trade accounts for 29 percent of the GDP. This result is much higher than previously thought by scholars. In addition, the urbanization of this area was also surprisingly high, reaching a level of 40 percent for the period. All these results challenge the conventional wisdom that the economy of this area was still “agricultural” or “traditional” before the mid-nineteenth century. Moreover, we should note that this period was not a “normal” one in climatic and economic terms, and the GDP estimated is most likely to have been lower then than it had been in the periods prior to this particular period. As such, the added values of rice and cotton cloth that appear in the tables, the two top staple goods produced in this area, should be more on the conservative side and may well be adjusted higher. In any event, the real GDP in this area should have been considerably higher in the first decade of the nineteenth century or in the last decades of the eighteenth century as compared to that in the years of 1823-29. V. The Yangzi Delta: an early modern economy in East Asia in a global perspective Almost everybody of us agrees that a comparative approach is crucial to economic history. It is, however, difficult to make meaningful comparisons because of the complex issues of comparability and incomparability between economies. To make the comparisons reasonable, a set of standards and indicators that can be equally applicable to both economies under comparison is indispensable. Otherwise, we may fall into the trap of some kind of “-centrism”—for instance, Euro-centrism, Sino-centrism, and so on—all of which are equally detrimental. In light of this, it is unfortunate that in most of the previous studies comparing the economic histories of China and the West, common standards and indicators were not carefully built into their analytical framework. As a result, many were flawed with subjective judgments and arbitrary comparison. Moreover, most China scholars have been taking the English pattern of early modern economic growth as the standard or even only model as they observe the case of China. Yet, it is apparent that the early modern economic growth of the Yangzi Delta may in fact have more similarities with that of the Netherlands than with that of England. The two areas of the Yangzi Delta and the Netherlands also shared some other common features, in terms of location, population density, topography, and so on. Therefore, they are certainly better 17 Li: A GDP study of the early modern Yangzi Delta The area and period objects of comparison in the study of early modern economic history. In the GDP study of the early modern Netherlands, Jan-Pieter Smiths, Edwin Holings, and Jan van Zanden have provided us with a clear picture of the Dutch GDP in the 1810s. The major results are summarized in Table 8. Table 8. Value Added by Economic Branch in the Netherlands, 1807 Value Added Percentage (millions of guilders) Primary Sector agriculture 119.3 24.3 1.4 0.3 120.7 24.6 mining 3.1 0.6 paper 1.0 0.2 foodstuffs 41.9 8.6 textiles 22.0 4.5 clothing 30.9 6.3 leather 10.0 2.0 chemicals 3.9 0.8 metal and engineering 4.3 0.9 shipbuilding 0.3 0.1 utilities 0.1 0.0 construction 16.9 3.5 other industries 8.2 1.7 142.7 29.1 foreign trade 57.0 11.6 domestic trade 25.1 5.1 maritime shipping 0.8 0.2 international river 2.4 0.5 inland navigation 30.8 6.3 other transportation 13.7 2.8 communication 0.9 0.2 fisheries total primary Secondary Sector total secondary Tertiary Sector shipping 18 Li: A GDP study of the early modern Yangzi Delta The area and period banking 2.8 0.6 insurance 1.2 0.2 government 32.0 6.5 domestic servants 17.6 3.6 education 1.9 0.4 remaining services 8.0 1.6 catering 12.9 2.6 housing 19.7 4.0 total tertiary 226.9 46.3 GDP 490.3 100 Source: Smiths, Holings, and van Zanden 2000: table 4.5. If we compare the economies of the Huating-Lou area in the 1820s and of the Netherlands in the 1810s, many significant similarities and differences can be found between them, as shown in tables 9 through 12. Table 9. Comparison of the Structure of GDP (%) Huating-Lou The Netherlands 1823–29 1807 Primary sector 31 24.6 Secondary sector 33 29.1 Tertiary sector 36 46.3 Total 100 100 Source: Li 2010: 270, table 13-3. Table 10. Comparison of the Structure of Employment (%) Huating-Lou The Netherlands 1823–29 1807 Primary sector 27 42.7 Secondary sector 56 26.0 Tertiary sector 16 30.5 Total 100 100 Source: Li 2010: 271, table 13-4. Table 11: Comparison of Urbanization (%) 19 Li: A GDP study of the early modern Yangzi Delta The area and period Huating-Lou The Netherlands 1823–29 1815 Rural 60 65 Urban 39 35 city 27 17.5 township 13 17.5 100 100 Total Source: Li 2010: 271, table 13-5. Table 12. Comparison of National Income (%) Huating-Lou The Netherlands 1823–29 1807 Wage 38.6 61 Capital income 33.1 14 (interest and rent) Profit 16.2 20 Depreciation 6.3 6 Indirect taxes 6.8 - Total 100 100 Source: Li 2010: 274, table 13-8. It is easy to see that the two economies in the early nineteenth century were quite similar to each other in the following aspects. First, agriculture accounted only for less than half of both GDP and labor force. In this sense, neither of the two economies can be regarded as a “traditional economy,” which is defined as one dominated by agriculture. Second, the urban population accounted for more than one-third of the whole population. By any pre-modern standard, the two societies were quite urbanized. Notwithstanding these similarities, important differences can also be seen in the comparison. The most important one is that the share of industry (the secondary sector) was higher in the Huating-Lou area than in the Netherlands (33 percent vs. 29 percent), whereas the share of services (tertiary sector) was much lower in Huating-Lou than in the Netherlands (36 percent vs. 46 percent). These differences reflect the realities of the two economies: the Huating-Lou area and its neighboring counties were the center of the flourishing cotton textile industry of China, which produced 60 percent of the cotton cloth in China’s domestic 20 Li: A GDP study of the early modern Yangzi Delta The area and period long-distance trade and foreign trade, whereas the Netherlands was the largest center of entrepôt trade of the European Continent by 1800, and trade took up a large part of the Dutch economy. A recent comparative study made by Jan Luiten van Zanden and myself (Li & van Zanden 2012) also indicates that in terms of the GDP per capita (PPP), the Yangzi Delta roughly matched Western Europe as a whole in the early nineteenth century, though lower than the Netherlands.23 It proves that the levels of economic development between the Yangzi Delta and Western Europe were considerably close each other. This is the basis from which the “Great Divergence” took place. Based on the comparisons, a question can be asked: Was the pre-mid-nineteenth century economy of the Yangzi Delta still “traditional”, or just the opposite, it had been some kind of “modern” by the time? There has not been a generally accepted definition of “modern economy.” Here, I take a definition from the point of view of macroeconomic structure that may be the simplest: A “modern economy” is an economy in which industry and services supersede agriculture and become dominant, in contrast to the pre-modern economy, in which agriculture constitutes the major component. De Vries and van der Woude, as is shown in the title of their coauthored book The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (1997), argue that the Dutch economy had become a “modern economy” by 1815. If the economy of the Netherlands at the beginning of the nineteenth century can be seen as “the first modern economy” in the world, we can say that such a “modern economy” also existed in the Yangzi Delta in general and the Huating-Lou area in particular. Although this modern economy is definitely different from the modern economy that is commonly perceived, it is evident that some kind of “modernity” existed in the two types of “modern” economies—those of the Netherlands and Yangzi Delta. The simultaneous coexistence of two modern economies at both ends of Eurasia reveals that economic “modernity” is not uniquely West European. Moreover, the economic modernity shared by the Netherlands and the Yangzi Delta is significant for their later modern economic growth. Though lagging behind England, the levels of GDP per man-hour in the Netherlands remained among the highest in the world during most of the nineteenth century (Maddison 1991, 1995), 23 Though the Netherlands failed to produce their own industrial revolutions, it ranked among the top few countries which had highest GDP per capita after it lost its leading position in economic growth after the mid-eighteenth century when the Industrial Revolution took place in England. According to an estimate, even the early twentieth century, in terms of GDP per capita, the Netherlands ranked fifth worldwide in 1900, only after New Zealand, Australia, the USA and Belgium. (http://www.nationmaster.com/graph/eco_gdp_per_cap_in_ 190-economy-gdp-per-capita-1900). 21 Li: A GDP study of the early modern Yangzi Delta The area and period whereas the levels of GDP per capita in the delta also remained the highest in China and were among the highest in East Asia during most of the nineteenth century. This affirms that economic modernity not only existed in the two areas, but played a very important role in the actual long-term process of economic modernization in both economies. This modernity explains partly why the Yangzi Delta’s success in modern economic growth. Though suffering from long-time economic depression and social unrest, tangled civil wars and wars, the delta still became the second industrialized area before the mid-twentieth century, just after Japan. In the story of China’s catch-up with the Western countries though its recent economic miracle, the delta is the protagonist. The delta had been much behind Western Europe in the level of economic development before 1979 when the economic reform began in China. In the following three decades, in particular since 1992, however, the delta’ economy has been growing dramatically. In terms of GDP per capita (PPP), in 1978 the GDP per capita of the delta was something like US$ 1,200, less than 1/8 of that of France (US$ 9,424), 1/5 of that of the UK (US$ 5,727), and was only half of that of Portugal (US$2,349), the poorest country in Western Europe. In 2009, however, the GDP per capita of the delta rose to US$ 11,600 in official exchange rate, growing almost tenfold compared with the 1978 figure. Since the Chinese currency is thought to be undervalued considerably, it is estimated that the 2009 GDP per capita of the delta should reach US$ 21,190 (in the 2009 US dollar) using the PPP measurement, which was 60% of that of the UK (US$ 35,200) or 65% of that of France (US$ 32,800), equaled to that of Portugal (US$ 21,800) and much higher than that of most of the ex-communist countries such as Hungary (US$ 18,600), Poland (US$ 17,900) and Russia (US$ 15,100). The narrowing of the gap between the Yangzi Delta and the major West European countries means that the delta is successful in its rapid catch-up with Western Europe. In this sense, the catch-up can be seen a “Great Convergence” of the two ends of Eurasia in the level of economic development (Li forthcoming). The contemporary “Great Convergence” is just a result of the catch-up. If we know the economic performance of the Yangzi Delta in past centuries, it would be not difficult to understand why the Yangzi Delta performs so well in China’s recent catch-up with Western Europe. Finally, I’d like to conclude this paper with the bellow words. Since the GDP study is new to Chinese economic historians, it is natural that it is treated with some skepticism. But the approach is really worth trying, because only by the process of application can the approach be improved. As a “venture” to many scholars in some sense, the new approach surely involves some risks but promises good rewards, since the methods (in particular the SNA) are already comparatively mature, while huge amounts of historical 22 Li: A GDP study of the early modern Yangzi Delta The area and period materials provide the hidden riches to be exploited. It will be worth to try even if one fails, because anything new has to be tried by somebody. In this sense, an example is furnished by my study of the GDP of Songjiang of 1820s, which provides, for the first time, a more complete picture of the economy of an area of China before the modern West arrived in the mid-nineteenth century, and, a more objective comparison between economies of one area of China and one area of Europe. Though the conclusions and statements of the study, as in any works on economic history, are the first approximation to the reality only, it represents a new step to the efforts of seeking for a new and better understanding of the Chinese economic history. The initial reaction from the academic circle to the study is pretty encouraging,24 which can be seen an evidence that the mainstream of Chinese economic historiography is open to new approaches. In sum, we are living in a new era, in which it is inevitable for economic history to meet new challenges. 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