University of Groningen Essays on China’s Economic History of the Late Qing Empire Ma, Ye

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University of Groningen

Essays on China’s Economic History of the Late Qing Empire

Ma, Ye

DOI:

10.33612/diss.146792235

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Publication date: 2020

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Ma, Y. (2020). Essays on China’s Economic History of the Late Qing Empire: Historical GDP, Early Industrialisation and the Qing State’s Role in Economic Development. University of Groningen, SOM research school. https://doi.org/10.33612/diss.146792235

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Essays on China's Economic History of

the Late Qing Empire

Historical GDP, Early Industrialisation and the Qing

State's Role in Economic Development

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Publisher: University of Groningen, Groningen, The Netherlands Printer: Ipskamp Printing

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system of any nature, or transmitted in any form or by any means, electronic, mechanical, now known or hereafter invented, including photocopying or recording, without prior written permission of the publisher.

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Essays on China’s Economic

History of the Late Qing Empire

Historical GDP, Early Industrialisation and the Qing State’s Role

in Economic Development

PhD thesis

to obtain the degree of PhD at the University of Groningen

on the authority of the Rector Magnificus Prof. C. Wijmenga

and in accordance with the decision by the College of Deans. This thesis will be defended in public on Thursday 10 December 2020 at 11.00 hours

by

Ye Ma

born on 28 April 1985

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Supervisor

Prof. H.J. de Jong

Co-supervisor

Dr. J. Bolt

Assessment Committee

Prof. R.C. Inklaar Prof. J.L. van Zanden Prof. D. Ma

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i Contents

List of Tables ... v

List of Figures ... vii

List of Appendix Tables and Figures ... ix

Acknowledgements ... xi

1 Introduction ... 1

1.1 Pre-war China’s economic dynamics ... 3

1.2 Pre-war China’s economy in comparison ... 5

1.3 Pre-war China’s institutional changes ... 7

1.4 Structure, summary and contributions of the dissertation ... 9

2 Unfolding the Turbulent Century: A Reconstruction of China's Historical National Accounts, 1840–1912 ... 17

2.1 Introduction ... 17

2.2 China’s growth in the literature ... 18

2.3 A new estimation of historical GDP ... 21

2.3.1 Agricultural production ... 23

2.3.2 Industrial production... 27

2.3.3 The service sector ... 30

2.3.4 Real GDP and GDP per capita ... 32

2.4 Plausibility of the new results ... 33

2.5 Economic stagnation in the late Qing Empire ... 41

2.6 Conclusion ... 44

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ii

3 Measuring China’s Performance in the World Economy: A Benchmark Comparison between the Economies of China and the UK in the Early Twentieth

Century ... 63

3.1.1 China’s path of industrialisation before the 1930s ... 65

3.2 The Chinese economy in the early twentieth century ... 66

3.2.1 GDP per capita and Economic structure ... 67

3.2.2 Manufacturing structure ... 69

3.2.3 Trade pattern ... 74

3.3 Calculating Purchasing Power Parities ... 76

3.4 Sources and data ... 78

3.4.1 The industrial census of China of the 1910s... 79

3.4.2 Data matching and coverage ... 82

3.5 Analysing the new levels of prices, productivity and GDP ... 85

3.5.1 New manufacturing PPPs ... 85

3.5.2 Labour productivity ... 88

Appendix 1 Comparisons between the two economies ca. 1910 ... 99

Appendix 2 Data and calculation procedures ... 102

4 The Qing State’s Influence on Early Manufacturing of the 1910s: New Measurements at the Provincial Level ... 107

4.2 Literature and historical background... 110

4.2.1 The Self-Strengthening Movement of 1861–95 ... 110

4.2.2 The Qing state’s investment and China’s early industrialisation ... 113

4.3 New measurements for the Qing state’s investment and factor analysis results ... 119

4.3.1 Data collection and indicator calculation ... 119

4.3.2 Factor analysis ... 123

4.3.3 Measuring state investment in the late Qing period: a new description .... 127

4.4 The Qing state’s influence on early manufacturing in the 1910s ... 134

4.4.1 Model specification ... 134

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iii

4.4.3 Robustness checks ... 150

Appendix 1 Data collection and calculation ... 158

1.1 New education and training ... 158

1.2 Military production and related state-owned factories ... 159

1.3 Telegraph and railways ... 160

Appendix 2 Summary of variables and data sources ... 169

Appendix 3 Regions and provinces within Qing China ... 174

5 The State Civilian Granary System and Grain Prices in Eighteenth–Nineteenth Century China ... 175

5.2 Price interventions and the Chinese state civilian granary system... 176

5.2.1 An introduction to the historical background ... 176

5.2.2 Literature review ... 178

5.3 Data on the granary system and rice prices ... 180

5.4 Models and econometric methods ... 186

5.4.1 A conceptual framework ... 187

5.4.2 A regression model ... 189

5.5 Estimation results ... 191

5.6 Robustness checks ... 195

5.6.1 The granary system and price dispersion in a province... 195

5.6.2 The granary system and the inland waterways ... 196

Appendix 1 Data and estimation procedures ... 205

6 Conclusion and Discussion ... 215

6.1 Historical GDP and economic growth ... 215

6.2 Early industrialisation and structural change ... 216

6.3 The role of the Qing state in the economy ... 218

References ... 221

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v List of Tables

2. 1 Historical GDP per capita estimates for China, 1800–1936 ... 20

2. 2 Annual growth of real GDP per capita, various countries and regions, 1840–1910 ... 40

3. 1 Economic levels and structure, China/UK, the early twentieth century ... 68

3. 2 Product matches and coverage ratios in comparing manufacturing industries, China/UK, 1912/1907 ... 83

3. 3 PPPs in manufacturing, China/UK, 1912/1907 ... 86

3. 4 Comparative labour productivity in manufacturing, China/UK, 1912/07, 1935 .. 89

3. 5 Comparative labour productivity in manufacturing, various countries, ca. 1910, 1935 (UK=100) ... 90

3. 6 Comparative labour productivity in manufacturing, regions of China /UK, ca. 1910... 95

4. 1 The Qing state-invested programmes during the Self-Strengthening Movement ... 110

4. 2 Correlation matrix of the indicators for the Qing state's investment ... 124

4. 3 Rotated factor loading matrix and unique variance ... 126

4. 4 Correlations between indicators and factor scores... 127

4. 5 Rankings of the top and bottom provinces in the Qing state’s investment ... 133

4. 6 Baseline estimation results: the effects of the Qing state’s investment ... 141

4. 7 Robustness: other indicators for industrial performance ... 147

4. 8 Robustness: the heavy and light industries ... 152

4. 9 Robustness: samples of specific industries ... 154

4. 10 Robustness: specific provinces excluded ... 155

5. 1 Baseline estimation results: the effect of granary storage and silver reserves .... 193

5. 2 Robustness: the effect of granary storage on wheat price fluctuation, the Canal/ non-Canal regions ... 199

5. 3 Robustness: the effect of granary storage on wheat price fluctuation, w.r.t. inland waterways, full sample... 203

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vii List of Figures

1. 1 Great Divergence, Little Divergence and GDP per capita estimation ... 7

2. 1 Estimations of per capita GDP in China, 1840–1940, in 1990 int. dollars ... 34

2. 2 The new estimation of Chinese GDP and GDP per capita, 1840–1912, constant prices, 1912=1 ... 37

2. 3 Chinese GDP by sector, 1840–1912, current prices and prices of 1912 ... 42

2. 4 Land productivity for food crops and the population/land ratio, 1840–1920, 1912=1 ... 43

3. 1 Manufacturing structure, China, 1912, 1935, and the UK, 1907 ... 71

3. 2 Manufacturing structure, regions within China, 1912, and the UK, 1907 ... 72

3. 3 Export and import shares, China, 1912, 1935, and the UK, 1907 ... 75

3. 4 Comparative labour productivity, Japan/UK, China/UK, the 1890s–1930s (UK=100) ... 92

3. 5 Regions within China in ca. 1910: comparative labour productivity in manufacturing and GDP per capita ... 96

4. 1 Catell’s scree test ... 125

4. 2 Comparisons of factor scores: sample provinces and two periods, 1860–96 and 1860–1910... 129

4. 3 Factor scores for the Qing state’s investment and changes in provinces, before and after 1896 ... 130

4. 4 Regional differences in the Qing state’s investment, 1860–96 and 1860–1910 . 132 4. 5 Baseline estimation results: the effects of the Qing state’s investment, before and after 1896 ... 149

4. 6 Variations in the effects of the Qing state’s investment, before and after 1896 . 150 4. 7 Robustness: the effects of the post-1896 military-related investment on the light and heavy industries ... 153

5. 1 Grain price fluctuations, rice and wheat, 1776–96, 1827–46, fen ... 183

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viii

5. 3 The correlations between rice price fluctuations and granary storage ... 186 5. 4 Understanding the relationship between the granary system and grain prices ... 187 5. 5 Baseline estimation results: the effect of granary storage on rice price fluctuation ... 194 5. 6 Robustness: the effect of granary storage on rice price dispersion w.r.t. distance to the Grand Canal ... 196 5. 7 Robustness: the effect of granary storage on wheat price fluctuation, the Canal/ non-Canal regions, 1786–88 ... 200 5. 8 Robustness: the effect of granary storage on wheat price fluctuation, the non-Canal region and inland waterways, 1786–88 ... 201

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ix List of Appendix Tables and Figures

Tables

A 1 General overview of estimation procedures ... 48

A 2 Estimation of new mechanised production in the industrial sector in China, 1885– 1920... 56

A 3 A benchmark GDP estimation of China for 1912 ... 58

A 4 Nominal and real GDP per capita in China, 1840–1912, taels and prices of 1912 ... 60

A 5 Manufacturing structure, China, 1912, 1935 and the UK, 1907, %... 99

A 6 Exports and imports, China, 1912, 1935, and the UK, 1907, current prices ... 100

A 7 Matched products and sub-industries, gross output, quantity and value, China/UK, 1912/1907 ... 102

A 8 Gross output PPPs in manufacturing, China/UK, 1912/1907 ... 104

A 9 Gross labour productivity in manufacturing, China/UK, 1912/1907... 106

A 10 Educational institutions ... 162

A 11 Military production and related state-owned factories ... 163

A 12 Indicators for the Qing state’s investment and calculation procedures ... 164

A 13 Data sources for the Qing state-invested programmes, late Qing period ... 165

A 14 New data and indicators for the Qing state’s investment, ca. 1896, 1910 ... 166

A 15 Descriptive statistics: new data and indicators ... 168

A 16 Factor scores estimated, representing the Qing state’s investment ... 169

A 17 Descriptive statistics: variables in the regression analysis... 170

A 18 Data sources of variables ... 172

A 19 Regions and provinces within Qing China ... 174

A 20 Descriptive statistics: grain prices and granary storage, 1776–96, 1827–46 .... 205

A 21 Descriptive statistics: variables in the regression analysis... 206

A 22 Baseline estimation results: rice price fluctuations and granary storage ... 207

A 23 Robustness: the effect of granary storage on rice price dispersion ... 208

A 24 Descriptive statistics, the sample for robustness check ... 209

A 25 Robustness: the effect of granary storage on wheat price fluctuation, the Canal/ non-Canal regions ... 210

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x

A 26 Robustness: the effect of granary storage on wheat price fluctuation, full sample ... 212 Figures

A 1 Sectoral GDP of China, 1840–1912, output index, 1912=1 ... 46 A 2 The new estimation of agriculture, industry, and services in China, output index, 1840–1912, 1912=1 ... 47

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xi Acknowledgements

This dissertation is a product of my own labour as well as of those who have supported me in years of work and study and in the challenging process of writing and revising this dissertation. Without all the help, I could not have completed this dissertation. I would like to use this opportunity to thank several people who in various ways have offered encouragement and assistance.

First of all, I would like to express my gratitude to my supervisors, Prof. Herman de Jong and Dr. Jutta Bolt. In the open and friendly environment created by them, I have always felt comfortable and confident to explore new research areas. I would like to thank Prof. Herman de Jong. Without his encouragement and guidance, the whole project would not have been possible. Especially, I would like to thank Dr. Jutta Bolt for helping me to go through the writing and revising process. Without her patience and support, I could not have completed the current version of this dissertation.

I would like to thank Prof. Jan Luiten van Zanden for inspiring my research in economic history from the very beginning and introducing me to the research teams at Utrecht University. I also would like to thank Prof. Robert Inklaar and Prof. Harry Wu for their comments at the early stage of my research. My gratitude particularly goes out to Dr. Bas van Leeuwen for his help on data collection. I would like to thank Prof. Debin Ma, Dr. Yi Xu, and Prof. Yuping Ni, for showing how intriguing the study of China’s economic history can be. I would like to thank Prof. Kyoji Fukao, Prof. Chiaki Moriguchi and Prof. Osamu Saito for their hospitality during my visit to Hitotsubashi University.

In addition, I would like to gratefully acknowledge the financial support from the Netherlands Organisation for Scientific Research (NWO PhD Grants no. 022.002.003), the N.W. Posthumus Institute for Economic and Social History, and the Faculty of Economics and Business (FEB) at the University of Groningen (RuG). My gratitude also goes out to the Research School SOM for providing the administrative support and the academic setting necessary for my research and career development, and especially for helping me to complete the procedure towards my defence ceremony. A special word of thanks must go to the secretaries of SOM and FEB for

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xii

helping me, an international student, with various work-related documents at any time when I needed.

To my officemates, Javier, Ceci and Bert, and to our economic history group, especially, Ben, Daniel, Oisin, Rick and Joost: It was pleasant to work with you, to go for conferences and to travel together. I enjoyed every lunchtime and coffee break with you. I will always remember our office, Room 732.

To my roommates, Zhijun, Flo and Haoge, and to my friends at RuG and in Groningen, especially Wang Xin, Cai, Noni, Silvia, Auke and Minghui: Your company turned my days in a foreign land into one of the most treasured periods in my life.

Finally, I especially would like to thank my parents and my grandparents for their support and understanding. From now on, I hopefully have more time to spend with them.