The significance of the Chinese miracle cannot be understated. For nearly 50 years, global growth has been largely fueled by China. According to data from the World Bank, between 2008 and 2021, China contributed over 40% of all global growth, while the world’s per capita GDP grew by 30% and China’s by a staggering 263%. Excluding China from the equation would result in a global GDP growth of only 33%, with per capita growth shrinking from 30% to 12%. This means that China’s robust recovery from the Great Recession almost tripled per capita growth worldwide during that time.
China’s rise has had an even more remarkable impact on poverty reduction at the lower end of the income spectrum. Approximately 800 million Chinese citizens have been lifted out of global poverty in recent decades. However, it’s important to note that the gains of the last four decades were primarily Chinese rather than global. According to experts David Oks and Henry Williams, China is responsible for roughly 45% of the total reduction in global extreme poverty since 1981. In fact, nearly 60% of those who crossed the $5 a day mark and 70% who crossed the $10 a day mark worldwide were Chinese.
It is impossible to completely separate China from economic history and treat the remaining data as a natural counterfactual. Globalization means that the economic trajectory of one country is intertwined with the fate of many others. China’s economic boom reshaped the world’s markets, making it a natural commercial and financial hub, an infrastructure leader, a universal trade partner, and a demand sponge. It absorbed a significant portion of Asia’s and the world’s offerings and production. While some countries have emulated China’s model of development based on manufacturing and urbanization, others have thrived as natural resource exporters, riding the global commodity supercycle that China generated. Unfortunately, some nations have prematurely deindustrialized in the process, leaving them ill-prepared to navigate the new economic landscape on their own. According to Ricardo Hausmann of the Harvard Kennedy School, only 20% of countries have managed to narrow their income gap with the United States since 1970, while the remaining 80% have not.
Despite some projections suggesting that India could be the next China, this analogy is flawed. India’s manufacturing sector has actually shrunk in recent years, and agricultural labor has increased. Private investment is also a smaller portion of GDP than it was a decade ago. Under Prime Minister Narendra Modi, India has failed to prioritize essential building blocks for robust economic development, such as healthcare. This hinders the country’s ability to climb the global economic ladder swiftly.
Considering all these factors, it is unlikely that the future holds great prospects, even if major global powers manage to avoid direct conflict.
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