When did Europe first forge ahead of China in terms of productivity and living standards? European economic historians have traditionally assumed that this divergence had already occurred by the sixteenth century or perhaps even earlier. This Eurocentric view was challenged by Kenneth Pomeranz’s 2000 book The Great Divergence, which argued that historical differences in economic performance between Europe and Asia were much less than was once thought, if regional variation within both continents is taken into account. Together with other members of the California School, Pomeranz argued that the divergence began only after 1800. Although the Californai School made use of scattered data covering parts of the economy, they were not able to call upon the most widely used measure of long run economic performance, gross domestic product (GDP) per capita, for the period before the mid-nineteenth century. In the absence of such data, important questions remained unanswered. Was China ever really wealthy? If so, when did China fall behind? And was this falling behind the result of positive growth in Europe or negative growth in China?

We answer these questions by estimating GDP per capita for China over the last millennium and comparing the results with recent estimates for other European and Asian economies covering the same period. Medieval and early modern European and Asian nations were more literate and numerate than is often thought and left a wealth of data, so that with careful cross-checking, it is possible to reconstruct population and GDP back to the medieval period, based on data produced at the time.

The estimates of Chinese GDP per capita can be used to compare economic performance during the Northern Song, Ming and Qing dynasties. We show that China’s GDP per capita fluctuated at a high level during the Northern Song and Ming dynasties, before trending downwards during the Qing dynasty, falling to around 70 per cent of its 980 level by 1840.

Placing these results for China in an international comparative framework sheds new light on the timing of the Great Divergence, which we now place at around 1700. First, we find that China was the richest economy in Eurasia (and therefore most likely in the world) around the year 1000. Second, although we find that Italy was richer than China as a whole by 1300, and both the Netherlands and Italy were richer by 1600, this does not mean that the Great Divergence had already started. For in 1600, the population of China was 160 million, dramatically larger than the 13.1 million in Italy and just 1.5 million in the Netherlands. This makes it very likely that there were similar sized regions of China that were still on a par with the richest parts of Europe. In 1820, we know that the Yangzi delta region of China had a GDP per capita that was 75% higher than in China as a whole. Projecting this ratio back in time, we see that the leading region of China diverged clearly from the leading region of Europe only after 1700. The Great Divergence thus began earlier than originally suggested by the Pomeranz and other California School writers, but later than implied by older Eurocentric writers.

The Great Divergence of 1700 coincides with two important developments. On the European side, it marks the beginning of modern economic growth in Britain, when sustained growth of per capita incomes occurred together with positive population growth (i.e. breaking out of the Malthusian trap). On the Asian side, China entered a period of declining per capita income, or sustained shrinking, as population grew rapidly, resulting in a reduction of land per person.

Please enjoy complimentary access to the article ‘China, Europe, and the Great Divergence: A Study in Historical National Accounting, 980–1850‘ until the end of October 2019.