Inputs, outputs and living standards in rural China during the 1920s and 30s: a quantitative analysis

Since Kenneth Pomeranz’s Great Divergence that was published in 2000, the scholarly debate has been focused on when the divergence was likely to begin. But a lack of real data for the Pomeranz framework has been noticeable. For our purpose, real data are imperative. The primary-source data this study uses are from the first large-scale modern survey of the rural economy in China in the 1920s and 30s to establish correlations between inputs, outputs and living standards in China’s rural sector. This study views China’s traditional growth trajectory continuing from the Qing to troubled times of the 1920s and 1930s despite considerable negative externalities from a regime change. The present view is that given that the rural economy managed to hang on during the Republican Period despite many disadvantages Qing China would have performed at least at the 1920s-30s’ level. Our findings indicate that rural population did indeed eat quite well during the politically troubled time, supporting Pomeranz’s pathbreaking comparison of utility functions between China’s Yangzi Delta and Western Europe. Secondly, food consumption proved incentives for improvement in labour productivity. Thirdly, China’s peasants were rational operators to maximise their returns. Fourthly, China’s highyield farming depended on land and labour inputs along a production probability frontier, which explains the root cause of the Great Divergence. Finally, there was a ‘little divergence’ inside China which was dictated by rice production, which justifies the Yangzi Delta as the best scenario.