China

Stephen Green: The Changing Face of China

Stephen Green (Lord Green of Hurstpierpoint) was Group Chairman of the HSBC Group from 2006-2010. He was subsequently until December 2013 a Minister of State for Trade and Investment in both the Department for Business, Investment and Skills and also the FCO. He is also an ordained priest in the Church of England. This is an edited version of the speech he gave at the RSAA Biennial Dinner on 20 May 2015.

My starting point has become familiar to us all: the extraordinary rise of China and the way it is changing the world. The transformation has been under way for roughly a generation now.

We now recognise that a historic convergence is under way. In 1820 the size of an economy relative to the world total output was roughly equal to that country’s share of world population. Then as now, China had the largest population, and its economy was the largest in the world. We all know what happened thereafter. The industrial revolution meant that for the first time in human history, some economies were able to produce consistently above subsistence level, thus creating a gap between the two ratios (Malthus was wrong – at least once industrialisation and urbanisation had begun to destroy older social structures). First the Europeans, then the Americans, and later the Japanese, thus achieved enormous increases in world market share. At the peak of their relative outperformance, these developed countries represented less than a fifth of the world’s population, but created around three quarters of world GDP. China was left behind.

The gap is now closing again, as China – and also country after country in Asia (and elsewhere in the emerging world) – starts to catch up with the standards of living which Europeans have come to take for granted. By 2020, on present trends, China will probably be the world’s largest economy again. China is already the largest exporter, the largest builder, largest consumer of steel, the largest emitter of carbon. This much we are familiar with.

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