China led the world in terms of income per capita during the early millenniums before the Europe catch up and maintained its high income per capita until now. With China’s GDP per capita almost 183.3% of Western Europe in 1300 and changed to only 48.8% (Maddison, 2001) by 1700, this event which took Europe away from Asia in terms of income per capita-the great divergence- occurred as early 16th century but focusing on the western part of Europe. During the period, Europe enjoyed high economic growth (Broadberry, 2015) particularly because of its institutional changes and factor prices features gave rises to the cause of the great divergence; it was not Asia who falling behind, but it was Europe who overtook Asia, an idea dubbed as the European miracle.
Quantitative data such as the national income and the silver can show when exacly the great divergence occurred as they compare the standard of living in those two regions. Apart from that, it can also be explained through other qualitative findings such as urbanisation rate and life expectancy in both regions.
The great divergence can be traced during the 16th and 17th centuries, a period after the Black Death and the fall of Ming dynasty in China. This period was indeed mark the point of divergence since most part of the western europe experienced sudden increase in income due to the drop in population during the Black Death while China, facing lower economic growth due to too large population increase, which causing it to hit the Malthusian trap, together with rebellions of Ming loyalists. From Maddisons’ findings, China’s GDP per capita was stagnant for more than three centuries from 1500. On the other hand, parts of europe experienced growth during the period, with England led the continent with almost 240% growth in GDP per capita(Maddison, 2001). These proofs of the change in income hence provide an idea that europe was indeed ahead of europe before the 19th century, rejecting the revisionists’ view.
However, the comparisons provided by Allen(Allen, 2011) which compare the purchasing power between the two regions in terms of silver is worth pointed out. In fact, it further build the view that the great divergence did occurred before the 19th century, or specifically during the Industrial Revolution. The development of two important basket of goods which compare the real purchasing power showed that, people who lived in London had the same living standard as in Beijing, until late 17th century. This thus slightly disagree with the previous view that the great divergence occurred by 15th century.
The main reason of this difference is, the first view ignored regional variation which led Europe and China to not be compared properly. What really happened was only some part of Europe was ahead of China-England and the Low Countries-while the others were still comparable and had the same standard of living (Allen, 2011, p. 30).
In conclusion, the great divergence that occurred in the late 18th century only involved the northwestern Europe while the others overtook China probably in the period of modern economic, post 19th century.
Some scholars said Europe was ahead of China because of its good institution, but was it? To explain this, both regions’ institutions should be analysed to identify the specific reasons of the differences particularly during the period of 16th to 18th century where the great divergence occurred.
Firstly, European had good institution because of its peculiar demographic transition where it experienced decreasing fertility rates, aided with high mean age at first marriage especially in north
western European countries by the 19th century (Hajnal, 1965). This significant event which successfully brought Europe out of the Malthusian trap, however did not occurred in China during the period. It was the event that made economic growth in Europe more aggressive because the high elasticity of crude birth rate-due to preventive check-resulted to higher wages. Due to rising cost for labour, this expanded the industrialisation to find more labour saving technology, thus making Europe more ahead than China.
China on the other hand depended on the positive checks (Zammit, 2016) in its demography, caused by the prolonged peace time during the Qing dynasty experienced Malthusian trap, which resulted to stagnation of its income per capita.
Secondly, it had better institution as it encouraged various revolution which reformed its political, economic, and social system. This can be seen, firstly through the change of government system, from feudal to democratic. The fact that European had decentralised government system with power held by other groups made its transition towards democracy faster. In fact, Olson (1993) argued that, democracy is indeed a better institution because it provides some public goods, and encourage politicians to gives incentive for populations to increase production by ruling low level of taxes.
This did not happen in China which maintained its highly centralised government system. Nevertheless, it is worth pointed Goldstone’s point that China did experience institutional change after Qing dynasty took over the reign from Ming dynasty. However, it was not as radical as in Europe since the Emperor still the most powerful person in the politics, with little tension from other groups
Apart from its institution, Europe also has good geographical factors relative to China, especially when comparing the resources per capita and accessibility to utilise the resources. In the early 15th century, when the European went through the age of exploration, they subsequently managed to increase their economies endowments. As it occurred during the period where population rose rapidly, Europe and particularly England managed to avoid ecological constraint. In China, however, even there were increase in output aided with exploration of the new territories in far west, the rapid growth in its population without further innovation created ecological constraints (Goldstone, 2002, p. 359-360).
The fact that China did grow and change its institution also should be highlighted. Some evidences that matter includes how well China was during the period; it might experience little growth in income per capita, but its output grew a lot where its manufacturing sector accounted for one third of the world’s. Data showed that indeed, life expectancy did grow in China, particularly in big cities such as Beijing and Suzhou (Goldstone, 2002, p. 352). The fact that some of Chinese population also consumed products such as silk and cotton showed that it had high standard of living and was comparable with Europe in terms of its consumption. Along with some reformations did by Qing dynasty, China should have been always great even after the Song period. Yet, it was not, because European miracle made Europe more suited for modern economic growth while China’s changes did not.
Therefore, it was European miracle- a revolutionised institution with better geographical factors- that caused Europe overtook China in the great divergence.