China's Role In The Great Divergence

Back to the Song Dynasty, China was a dominant country in its per capita income and technology where four Great Inventions were invented at that time. However, Europe enjoyed a higher living standard and more advanced technology hundreds of years later. This increasing difference between Chinese and European economy is called the “Great Divergence”.

In 1400, GDP per capita in England was 1090 international dollars which was slightly higher than that in China, 960 international dollars (England: Broadberry, Campbell, Klein, Overton and van Leeuwen 2011; China: Broadberry, Guan and Li 2013). This indicates the Great Divergence happened as early as 1400. The gap became much wider after 1750 where Britain benefited from the Industrial Revolution.

To begin with, the natural geographic advantage and convenient transportation allow Britain to explore the profound significance and widespread ramifications of endowments of cheap fossil fuels in allowing Britain to escape (before the rest of Europe) from potential ‘Malthusian traps’ (Patrick O 'Brien). Coal is important energy resource as it is cheap, efficient and long-lasting. Therefore, all forms of heat intensive industry and transportation (metallurgy, glass, pottery, beer, sugar and salt, refining soap, starch, railways and ships) benefited from the substitution of coal for other more costly and less efficient organic forms of energy (Patrick O 'Brien). As a result, Britain became the first country in Europe having more population but without any side effect, namely income per capita did not fall. In the second place, while China ended its trade, Europe began to expand its colonies which provide Europe abundant resources and create larger markets. A typical example can be found in triangular