To the naked eye it is obvious that China’s spectacular growth surge from the late 1970s onward is the largest single transformation in world economic history.
Excellent piece. I think this is exactly the right way to frame China’s development: not simply as another episode of catch-up growth, but as a historically unprecedented growth surge in scale, speed, duration, and population coverage.
One point I would add from a Chinese perspective is that the uniqueness of China’s transformation is not fully captured by GDP alone. GDP is the headline expression, but underneath it was a much broader conversion of society into productive capacity: mass urbanization, basic education, public health, infrastructure, electrification, ports, railways, industrial clusters, engineering labor, local government competition, supply-chain depth, and the ability to move hundreds of millions of people into a modern production system.
That is why China’s rise was not only an income event. It was also an energy event, an infrastructure event, an industrial-capacity event, and a state-capacity event. The coal chart captures something essential here: the so-called “weightless economy” was a local Western experience, while the global economy was being materially rebuilt at Chinese scale.
So I fully agree with the core argument: in scale and velocity, there is no historical comparison. China’s development should be understood as one of the largest acts of systemic capacity formation in modern history.
There’s a humanist angle too—nearly a billion people liberated from abject poverty and able to enjoy more than double the life expectancy of only a few decades ago. All without violent expansionism or colonialism!
The coal chart you mention does double work: it captures the energy event and the industrial event at once, since China's surge happens to coincide with the moment coal stops being the story everywhere else. Worth watching whether the next surge economy can convert society without the somatic-to-coal middle phase, or whether that phase was the conversion.
The chinese development is jawdropping, but basically stems mostly from its enormous population size.
If we just take the multiplication factors, the asian expansions are still respectable, but not so astronomical anymore:
china 31
japan 15
usa 2
How come?
1. Knowledge, know-how
The development in the US and Europe was in sync with the development of practical, scientific, engineering and organziational knowledge. There was no knowledge import from anywhere. Knowledge development has its own pace, which cannot be accelerated a lot with the knowledge at hand at the time.
In comparison, the knowledge China and Japan used was already on-shelf, it only needed to be sucked up and put into action. This process is *much* faster.
That's why growth rate there will enevitably come closer the one in the west: when all existing know-how has been implemented, all economies have to develop in pace with knowledge development, which is comparable across the field.
2. Uniformity of a large space
China is - with exceptions - uniform in written language, law, currency, political system, education. So once the market had been unleashed by the central committee, the development took place fast. It didn't uniformly, though: it started in specially adapted regions like the Shenzhen zone, and then spread.
3. Other factors.
It may be that organization, discipline, goal-orientedness, ambition and initiative are treats of chinese and japanese people - which has still to be proven.
Excellent piece. It captures not just a changing world economy, but a changing civilizational texture. I think one of the most important insights in this piece is the shift from seeing the world as a collection of neat “lego block” economies to understanding it as a deeply entangled, adaptive, and fragile system. The old mental models of nation-states as self-contained economic units struggle to explain a reality shaped by supply chains, finance, data, energy flows, demographics, and ecological limits. Messy, uneven, partially connected, difficult to model, yet somehow still functioning. That feels closer to lived reality than both hyper-globalization narratives and nostalgic industrial nationalism.
From a systems perspective, the challenge is that complexity increases interdependence faster than governance capacity. We optimized for efficiency, scale, and growth, but underinvested in resilience, redundancy, social trust, and meaning. The result is a world that appears materially advanced, yet psychologically exhausted and politically brittle.
Also, beneath all the charts and structures are human beings trying to preserve dignity, stability, identity, and hope during periods of rapid transition. Economic systems ultimately survive not just on capital flows, but on whether societies still feel the future is worth participating in.
"Interdependence faster than governance capacity" has a precise security analog: a threat group recently chained five software supply compromises in five days, each breach feeding stolen credentials into the next. The attacker had a working map of the system; the defenders did not. Redundancy you underinvest in becomes an attack surface someone else inventories for you.
Right on the money. I'd add that as unprecedented as China's sustained explosive growth was its global context (which China also helped shape, of course): the world was unipolar and world trade was no-blocs, low-tariff, open-door. Neither the Gilded-Age USA nor Cold-War Japan's world looked quite like this. See https://substack.com/home/post/p-200426815 .
Hi Adam, your line that there is nothing in recorded economic history to compare really lands, and the number gets more striking when you look at what built it from the bottom.
Some of that growth was capability a foreign customer paid to install. Apple signed a secret five-year deal in 2016 to put about $275 billion into China. By Apple's own estimate it has trained more than 28 million workers there since 2008, more people than California's entire labor force. Cupertino engineers lived on the Foxconn floors in Zhengzhou and taught suppliers to hold tolerances those plants could not hold before.
Now once a supplier could build the impossible for Apple, building for Huawei, Xiaomi, and Oppo was the easy part. A former Apple engineer told Patrick McGee, the FT reporter who documented this: "We've trained a whole country and now that country is using it against us."
The $25.3 trillion is real. Part of it was a transfer, taught one factory at a time.
Thank you for this analysis of China's growth. This alone makes my subscription worth every cent. I love to start my day by reading your newsletter. So happy I stumbled over it, an article in the Guardian mentioned it.
And I was mad at Germany for burning so much coal. LOL.
Thanks as always for Adam's elegantly simple comparisons of vital data. I'd like to propose a different and I think more informative framework for comparison: Continental imperialist USA (1) from Civil War to 1929, Transoceanic imperialist USA (2) from 1938 to 1975, and then China as before.
Note that USA (2) includes Western Europe and Japan, but not South Korea or Taiwan, which didn't really take off until after the period measured as the US cold war dictatorships were dismantled. It also excludes Japanese and Western European growth after 1975.
USA (2) would be roughly equivalent in demographics with China. Yes, USA (2) does not comprise a single state, but hey let's get real about sovereignty within this cold war bloc assembled by the US, where especially it's two most dynamic economies, West Germany and Japan, were totally remade politically under US dictatorship.
These are numbers, ok. Interesting and certainly telling, but what about reasons/rationale?. Are we gonna read some within the next couple of weeks as promised? - in comparison to fellow substackers AT is quite stingy spreading his wisdom. Feeling Doubtful about matching my monthly coffee fee to the personal gain of reading ATs letters ..
Fascinating piece, thanks. I would love to hear your thoughts on the extent to which this development and growth trajectory is an effect of state-led socialist economic planning, and whether too the (often chaotic and tragic) years from 1949 to 1976 in China somehow laid the foundation for this extraordinary story of national modernisation?
This energy transition is different on two levels that compound each other: what energy physically is, and how it gets financed.
The physical difference is categorical. It is an exergy transition - like going from biological food to chemical fuels energy systems. There will be order of magnitude changes in energy efficiency” as we are changing the engine this time and not just the fuel. Coal→ Oil→ Gas is combustion optimisation better fuels. Solar and wind no wasteful conversion, the entropy profile changes fundamentally. This is the EMBER point – the quality of end energy availability is two-to-threefold. The equivalent to moving from horses to engines for mechanical work
The financing difference is underappreciated: the unit price of energy generation will collapse and quantities consumed will balloon. Think about the marginal calorie in a hunting society vs farming society. Hunting is opex/ income statement. Farming is capex/ balance sheet. So is electrotech.
As the world replaces hydrocarbons with electrotech, the entire structure of both the physics and the financing of energy changes.
China understood this and responded with industrial policy: build the manufacturing, drop the cost, build more – rinse and repeat. Tariffs are the subscription world defending itself against the capex world. China's grid will continue to grow even as it decelerates on a percentage basis, because that is what the cost structure of constructing it requires.
The real bizarre numbers are still coming. China may still drift towards ZIRP.
End energy availability will rise; marginal energy cost will collapse. We are going from hunting on horseback to farming with machines simultaneously in a single transition
We grew agriculture to feed ourselves and our animals. The machines that cheap abundant energy will feed do not exist yet because the energy that would make them possible doesn't exist yet either.
The opex-to-capex framing has a hidden corollary worth naming: combustion didn't just price energy, it priced food. Haber-Bosch turns natural gas into ammonia into the fertilizer behind roughly half the world's calories, which is why a gas spike shows up in Mosaic and CF Industries before it reaches CPI. If the marginal solar electron approaches zero, that nitrogen-to-grocery-shelf chain is the first thing to decouple. The balance sheet eats the income statement, and then it eats the supply chain too.
The ability for energy cost to be depreciated will change a lot of current business models. This is why I don’t understand AI where GPU depreciation is pitted against OPEX energy.
The social and economic restructuring that the CAPEX of farming and printing introduced by an abundance of calories and information will be repeated.
Excellent piece. I think this is exactly the right way to frame China’s development: not simply as another episode of catch-up growth, but as a historically unprecedented growth surge in scale, speed, duration, and population coverage.
One point I would add from a Chinese perspective is that the uniqueness of China’s transformation is not fully captured by GDP alone. GDP is the headline expression, but underneath it was a much broader conversion of society into productive capacity: mass urbanization, basic education, public health, infrastructure, electrification, ports, railways, industrial clusters, engineering labor, local government competition, supply-chain depth, and the ability to move hundreds of millions of people into a modern production system.
That is why China’s rise was not only an income event. It was also an energy event, an infrastructure event, an industrial-capacity event, and a state-capacity event. The coal chart captures something essential here: the so-called “weightless economy” was a local Western experience, while the global economy was being materially rebuilt at Chinese scale.
So I fully agree with the core argument: in scale and velocity, there is no historical comparison. China’s development should be understood as one of the largest acts of systemic capacity formation in modern history.
There’s a humanist angle too—nearly a billion people liberated from abject poverty and able to enjoy more than double the life expectancy of only a few decades ago. All without violent expansionism or colonialism!
Well said!
The coal chart you mention does double work: it captures the energy event and the industrial event at once, since China's surge happens to coincide with the moment coal stops being the story everywhere else. Worth watching whether the next surge economy can convert society without the somatic-to-coal middle phase, or whether that phase was the conversion.
The chinese development is jawdropping, but basically stems mostly from its enormous population size.
If we just take the multiplication factors, the asian expansions are still respectable, but not so astronomical anymore:
china 31
japan 15
usa 2
How come?
1. Knowledge, know-how
The development in the US and Europe was in sync with the development of practical, scientific, engineering and organziational knowledge. There was no knowledge import from anywhere. Knowledge development has its own pace, which cannot be accelerated a lot with the knowledge at hand at the time.
In comparison, the knowledge China and Japan used was already on-shelf, it only needed to be sucked up and put into action. This process is *much* faster.
That's why growth rate there will enevitably come closer the one in the west: when all existing know-how has been implemented, all economies have to develop in pace with knowledge development, which is comparable across the field.
2. Uniformity of a large space
China is - with exceptions - uniform in written language, law, currency, political system, education. So once the market had been unleashed by the central committee, the development took place fast. It didn't uniformly, though: it started in specially adapted regions like the Shenzhen zone, and then spread.
3. Other factors.
It may be that organization, discipline, goal-orientedness, ambition and initiative are treats of chinese and japanese people - which has still to be proven.
Excellent piece. It captures not just a changing world economy, but a changing civilizational texture. I think one of the most important insights in this piece is the shift from seeing the world as a collection of neat “lego block” economies to understanding it as a deeply entangled, adaptive, and fragile system. The old mental models of nation-states as self-contained economic units struggle to explain a reality shaped by supply chains, finance, data, energy flows, demographics, and ecological limits. Messy, uneven, partially connected, difficult to model, yet somehow still functioning. That feels closer to lived reality than both hyper-globalization narratives and nostalgic industrial nationalism.
From a systems perspective, the challenge is that complexity increases interdependence faster than governance capacity. We optimized for efficiency, scale, and growth, but underinvested in resilience, redundancy, social trust, and meaning. The result is a world that appears materially advanced, yet psychologically exhausted and politically brittle.
Also, beneath all the charts and structures are human beings trying to preserve dignity, stability, identity, and hope during periods of rapid transition. Economic systems ultimately survive not just on capital flows, but on whether societies still feel the future is worth participating in.
"Interdependence faster than governance capacity" has a precise security analog: a threat group recently chained five software supply compromises in five days, each breach feeding stolen credentials into the next. The attacker had a working map of the system; the defenders did not. Redundancy you underinvest in becomes an attack surface someone else inventories for you.
James Rose
China’s tremendous growth had an advantage in having advanced technology that already existed with a lot derived from the west
Right on the money. I'd add that as unprecedented as China's sustained explosive growth was its global context (which China also helped shape, of course): the world was unipolar and world trade was no-blocs, low-tariff, open-door. Neither the Gilded-Age USA nor Cold-War Japan's world looked quite like this. See https://substack.com/home/post/p-200426815 .
Hi Adam, your line that there is nothing in recorded economic history to compare really lands, and the number gets more striking when you look at what built it from the bottom.
Some of that growth was capability a foreign customer paid to install. Apple signed a secret five-year deal in 2016 to put about $275 billion into China. By Apple's own estimate it has trained more than 28 million workers there since 2008, more people than California's entire labor force. Cupertino engineers lived on the Foxconn floors in Zhengzhou and taught suppliers to hold tolerances those plants could not hold before.
Now once a supplier could build the impossible for Apple, building for Huawei, Xiaomi, and Oppo was the easy part. A former Apple engineer told Patrick McGee, the FT reporter who documented this: "We've trained a whole country and now that country is using it against us."
The $25.3 trillion is real. Part of it was a transfer, taught one factory at a time.
Thank you for this analysis of China's growth. This alone makes my subscription worth every cent. I love to start my day by reading your newsletter. So happy I stumbled over it, an article in the Guardian mentioned it.
And I was mad at Germany for burning so much coal. LOL.
Thanks as always for Adam's elegantly simple comparisons of vital data. I'd like to propose a different and I think more informative framework for comparison: Continental imperialist USA (1) from Civil War to 1929, Transoceanic imperialist USA (2) from 1938 to 1975, and then China as before.
Note that USA (2) includes Western Europe and Japan, but not South Korea or Taiwan, which didn't really take off until after the period measured as the US cold war dictatorships were dismantled. It also excludes Japanese and Western European growth after 1975.
USA (2) would be roughly equivalent in demographics with China. Yes, USA (2) does not comprise a single state, but hey let's get real about sovereignty within this cold war bloc assembled by the US, where especially it's two most dynamic economies, West Germany and Japan, were totally remade politically under US dictatorship.
Thoughts?
These are numbers, ok. Interesting and certainly telling, but what about reasons/rationale?. Are we gonna read some within the next couple of weeks as promised? - in comparison to fellow substackers AT is quite stingy spreading his wisdom. Feeling Doubtful about matching my monthly coffee fee to the personal gain of reading ATs letters ..
Fascinating piece, thanks. I would love to hear your thoughts on the extent to which this development and growth trajectory is an effect of state-led socialist economic planning, and whether too the (often chaotic and tragic) years from 1949 to 1976 in China somehow laid the foundation for this extraordinary story of national modernisation?
Useful post, thanks. One side addition about the 20th century. You wrote:
“This was the world that defined the first phase of global climate politics and its North-South politics,…”
Not to forget WWI and WWII, especially the latter, which was centrally fought over access to oil and has defined world politics since then.
The crazy numbers are yet to come.
This energy transition is different on two levels that compound each other: what energy physically is, and how it gets financed.
The physical difference is categorical. It is an exergy transition - like going from biological food to chemical fuels energy systems. There will be order of magnitude changes in energy efficiency” as we are changing the engine this time and not just the fuel. Coal→ Oil→ Gas is combustion optimisation better fuels. Solar and wind no wasteful conversion, the entropy profile changes fundamentally. This is the EMBER point – the quality of end energy availability is two-to-threefold. The equivalent to moving from horses to engines for mechanical work
The financing difference is underappreciated: the unit price of energy generation will collapse and quantities consumed will balloon. Think about the marginal calorie in a hunting society vs farming society. Hunting is opex/ income statement. Farming is capex/ balance sheet. So is electrotech.
As the world replaces hydrocarbons with electrotech, the entire structure of both the physics and the financing of energy changes.
China understood this and responded with industrial policy: build the manufacturing, drop the cost, build more – rinse and repeat. Tariffs are the subscription world defending itself against the capex world. China's grid will continue to grow even as it decelerates on a percentage basis, because that is what the cost structure of constructing it requires.
The real bizarre numbers are still coming. China may still drift towards ZIRP.
End energy availability will rise; marginal energy cost will collapse. We are going from hunting on horseback to farming with machines simultaneously in a single transition
We grew agriculture to feed ourselves and our animals. The machines that cheap abundant energy will feed do not exist yet because the energy that would make them possible doesn't exist yet either.
The opex-to-capex framing has a hidden corollary worth naming: combustion didn't just price energy, it priced food. Haber-Bosch turns natural gas into ammonia into the fertilizer behind roughly half the world's calories, which is why a gas spike shows up in Mosaic and CF Industries before it reaches CPI. If the marginal solar electron approaches zero, that nitrogen-to-grocery-shelf chain is the first thing to decouple. The balance sheet eats the income statement, and then it eats the supply chain too.
The ability for energy cost to be depreciated will change a lot of current business models. This is why I don’t understand AI where GPU depreciation is pitted against OPEX energy.
The social and economic restructuring that the CAPEX of farming and printing introduced by an abundance of calories and information will be repeated.
There will be crazy numbers everywhere!
Excellent.
So it turns out population growth hasn't been the big concern we thought it was but GDP growth in China turns out to be real.
I guess the big problem becomes when China assists Africa to grow in a similar way to China.
Will that be a population growth problem or a GDP growth problem.
And is population growth inversely related to GDP growth or just precedes it?
I visited China in 1994 and 1997. The energy was already palpable.