The China Effect

"In 2000 as a result of the collapse of communism, India’s turn from autarky, China's shift to market capitalism, the global economy encompassed six billion people. Had China, India and the former Soviet empire stayed outside, the global economy would have had 3.3 billion people." As Smith adds: "The 'before' and 'after' picture was of a worldwide workforce of 1.46 billion in 2000, swollen to 2.93 billion as a result of China (760 million), India (440 million) and the ex-Soviet states (260 million)." China’s growth was proclaimed as 'unique'. Moreover, they projected an ascending line – a linear growth – of Chinese economic expansion into the future. Within an expansion averaging between 8% and 9%, stretching over 23 years, China has undoubtedly had a major effect in prolonging the present upward cycle of world capitalism. But this growth is not at all 'unique'. In fundamentals it is little different to the experience of the Asian 'Tigers' more than 20 years ago. Stimulated by land reform – removing the residual elements of feudalism – under US occupation and with favourable treatment, Japan averaged a growth rate of 8% between 1950 and 1980, sometimes reaching an annual rate of 13%. The economy doubled in size every six years and something similar occurred in Hong Kong, South Korea, Singapore and Taiwan.