How China Is Like the 19th Century U.S.

I spend a lot of time reading about manufacturing and its evolution, which means I end up repeatedly reading about the times and places where radical changes in manufacturing were taking place: Britain in the late 18th century, the US in the late 19th and early 20th centuries, Japan in the second half of the 20th century, and (to a lesser extent) China today. I’ve been struck by how many parallels there are between modern China (roughly the period from the late 1970s till today) and the Gilded Age/Progressive era U.S. (roughly the period from the late 1860s to the 1920s).

During these periods, unprecedented levels of economic growth combined with large populations were making both the U.S. and China wealthy and powerful. Both countries were urbanizing, building enormous amounts of infrastructure, and becoming by far the largest manufacturers in the world, with industrial operations of unprecedented size. Both were undergoing wrenching social and cultural change as old institutions were replaced by new ones, and the countries began to become “modern.” Both were nations of ambitious strivers, where it seemed like anyone with talent could make themselves into a success by catching the tide of rising opportunity. Despite the many differences between the two countries, the forces of development pulled them along very similar paths.

The rise of the U.S., the rise of China

In the decades following the Civil War and the Cultural Revolution, respectively, the U.S. and China both saw record-setting economic growth. In 1820 the US had a GDP roughly 1/3rd the size of the United Kingdom’s or France’s, and roughly half of Germany’s or Italy’s. By 1870, its GDP was nearly as large as the UK’s, and was about 40% larger than France or Germany’s. By 1913, its GDP was more than twice as large as either the UK’s or Germany’s.

In the 1870s, the US grew somewhere between 4.5 and 6.7 percent annually in real terms, one of the fastest growth rates ever recorded. From 1870 to 1913, the US maintained a growth rate of nearly 4%; no European country had a growth rate more than 3% over the same period. In his book on tycoons of the Gilded Age, Charles Morris states that “the sustained American growth spurt was the fastest in history, at least until the Pacific Rim countries made their run for daylight a century later.”

China, of course, has redefined what it means to be “rapidly growing.” It went from having the 6th-largest GDP in 1980 (slightly larger than Canada’s) to the second largest GDP in 2010. While today China is still behind the US in GDP (without adjusting for purchasing power, at least), it’s nearly four times the size of the third largest country, Germany. Between 1980 and 2020, China’s GDP grew nearly 10% annually in real terms.

Both the U.S. and China were able to become such large economies in part because of their comparatively large populations. China was already by far the largest country by population in 1980 with nearly 1 billion people, and today it has over 1.4 billion (though it's been eclipsed in population by India.) The U.S. grew from a relatively small population in 1820 (half the UK’s and 1/3rd that of France) to having by far the largest population of any industrialized country.

The U.S.’s population surge was in part the result of immigration. Between 1880 and 1920, the number of foreign-born residents in the US doubled, from 7 million to 14 million, and by 1920 roughly 1/3rd of the U.S.’s population was either first or second generation immigrants. In some cities in the early 20th century, immigrants and their children made up as much as 3/4ths of the population.

China hasn’t had the same influx of immigrants (its foreign-born population remains small, less than 1.5 million, or around 0.1% of the population), but it saw its own wave of migration in the form of huge masses of workers migrating from rural areas to cities. Over three decades, 130 million migrants had moved into cities, the largest migration in human history. Because China’s hukou residency system (which classifies someone as a resident of a particular place, and an urban or rural resident) places limits on worker movement, migration in China in some ways resembled foreign immigration. Migration was often done illicitly, and migrants often faced discrimination and poor working conditions.

In both countries, this mass movement of people was paralleled by a rapid growth of cities and an increase in urbanization. In 1860, the US was still mostly a rural country, with an urbanization rate of around 20%. By 1920, urbanization had passed 50%, reaching 75% in the more industrialized Northeast. The U.S. didn’t have a single city larger than 1 million people in 1860, and the population of the 10 largest cities combined was only around 2.7 million. By 1920, there were three (nearly four) U.S. cities with a population of 1 million or more, and the population of the 10 largest cities was more than 15 million. China likewise went from an urbanization rate of less than 20% in 1980 to more than 60% in 2020, as millions of people poured into its cities. Shenzhen had a population of around 30,000 in 1980; by 2020, it had a population of more than 17 million, and was the third largest city in China.

Shenzhen in 1985 vs Shenzhen in 2015.

China’s rapid urbanization is reflected in a constant stream of impressive feats of infrastructure construction. China has built the world’s largest high-speed rail network, the world’s largest hydroelectric project, and the world’s largest seaport. It builds more skyscrapers than any other country, has 5 of the 10 longest bridges in the world, and 90 of the 100 tallest bridges in the world.

In the late 19th and early 20th century, however, it was the U.S. achieving these amazing feats of building. Between 1860 and 1916 the US built more than 200,000 miles of railroad track, and laid 74 million miles of telephone wire between 1880 and 1930. While virtually no one in the U.S. had access to electric power in 1870, by 1930 “electricity was available in nearly 70% of US homes, and supplied almost 80% of industrial mechanical power.” The steel-skeleton skyscraper first appeared in Chicago in 1885, and by 1930 the top 10 tallest buildings in the world were all in the U.S.¹ During this period, the U.S. also tackled ambitious projects like filling in part of the Charles River Basin to create Back Bay in Boston, reversing the flow of the Chicago River, and raising the city of Galveston. 

As they were urbanizing, both the U.S. and China were transforming from a nation of farmers to manufacturing powerhouses. In 1860, agriculture still employed more than 50% of the U.S. workforce, and was most of U.S. exports (cotton alone made up 60% of the value of U.S. exports). By 1920, agriculture employment had fallen to 20% of the workforce, and was on the verge of being surpassed by manufacturing employment. As late as 1870, the U.S. had virtually no steel industry, but by 1900 it was producing more steel as the next two largest producers combined (Germany and the UK). The U.S. went from producing 7% of the world’s industrial output in 1860 to 40% in 1929.

Around the turn of the 20th century, Europeans began to publicly worry about the tidal wave of cheap exports and novel products arriving from the U.S.. Charles Morris notes that “Attentive European elites were shocked as they came to understand the scale and speed of America’s ascendancy. Hardly three decades before, America was still torn and bleeding from a savage civil war, making its living exporting raw cotton, grain, and timber in exchange for Europe’s surplus manufactures.”

While today you can’t throw a rock without hitting a book about the rise of China, in the late 19th and early 20th centuries there were hundreds of books written discussing America’s economic success. A 1902 British book, The American Invaders, chronicled how American manufactured goods were transforming lives “from Madrid to St. Petersburg”:

“The average citizen wakes in the morning at the sound of an American [alarm] clock; rises from his New England sheets, and shaves with his New York soap, and a Yankee safety razor. He pulls on a pair of Boston boots over his socks from West Carolina, fastens his Connecticut braces, slips his Waterbury watch into his pocket and sits down to breakfast. Then he congratulates his wife on the way her Illinois straight-front corset sets off her Massachusetts blouse, and begins his breakfast at which he eats bread made from prairie flour... tinned oysters from Baltimore, and a little Kansas City bacon... The children are given Quaker Oats. Concurrently he reads his morning paper, set up by American machines, printed with American ink, by American presses, on American paper... Rising from his breakfast table the citizen rushes out, catches an electric tram [made] in New York to Shepherd’s Bush, where he gets into a Yankee elevator, which takes him on to the American-fitted railway to the city. At his office of course everything is American. He sits at a Nebraskan swivel chair, before a Michigan roll-top desk, writes his letters on a Syracuse typewriter, signing them with a New York fountain pen, and drying them with a blotting sheet from New England. The letter copies are put away in files manufactured in Grand Rapids. When evening comes he seeks relaxation at the latest Adelphi melodrama or Drury Lane startler, both made in America... For relief he drinks a cocktail or some California wine and finishes up with a couple of ‘little liver pills’ made in America…”

The manufactured goods that America did produce were often considered low quality: Morris notes that up to the Civil War, most American tools and guns were made of British steel parts, and that for railroads, “any carrier looking for quality rails and rolling stock did its shopping in England.” But by the early 20th century, American goods seemed to be conquering the world, even complex, high-end goods like locomotives and machine tools. 

China seems to have matched this trajectory beat for beat. Agriculture employment was nearly 70% in China in 1980; by 2020 it had fallen to around 23%. China rose from 5% of global industrial production in 1995 to 35% in 2020. In industries like steel, batteries, solar panels, and electric vehicles China manufactures an enormous fraction of world output. And while historically Chinese goods were considered low quality, today they lead the field in things like 3D printers and drones, and are closing in even on exceptionally complex products like jet aircraft.

In both the U.S. and China, the transition to manufacturing powerhouse came through operating at previously unimaginable levels of scale. In the late 19th and early 20th century, the development of transportation and communication infrastructure like railroads, steamships, and telegraphs made it possible to cost effectively transport goods long distances, creating large markets and enabling the creation of enormous industrial facilities far larger than anything that had been seen before. 

The U.S. developed a host of mass-production and continuous-process manufacturing methods that could produce a constant stream of output in enormous quantities, a transformation sometimes known as the second industrial revolution. Alfred Chandler notes in “The Visible Hand” that continuous or near-continuous process machinery transformed the production of things like tobacco, canned food, soap, petroleum, liquor, steel, glass, cigarettes, matches, and bottles. The Bonsack cigarette machine, invented in 1881, could automatically perform every operation of cigarette making, and just 30 such machines were needed to produce enough cigarettes for the entire U.S. In the 1870s, the Diamond Match company developed machines that could make matches by the billions; around this same time, automatic screw cutting lathes were developed to produce huge quantities of metal screws. In the case of oats, new continuous mills generated so much output that manufacturers were forced to invent a new product — breakfast cereal — to make use of it all. In the early 20th century, Ford’s assembly line revolutionized car manufacturing, and similar mass production methods (often under the name “Fordism”) were adopted by other industries for complex manufactured goods.

Modern China has also pushed the scale envelope in its manufacturing operations. The peak of scale in American manufacturing operations is arguably Ford’s Rouge complex, which has operations spread over nearly 1,000 acres and at its height employed around 75,000 workers. Compare that to Foxconn City, which employed around 420,000 workers circa 2010. Yadea, the world’s largest manufacturer of 2-wheeled electric vehicles, has a single factory spread across more than 1,000 acres, and it’s just Phase I: Phases II and III are expected to be even larger. Vehicle makers BYD and Xpeng have also built what seem like Rouge-sized facilities. China’s largest steel maker, Baowu, made 131 million metric tons of steel last year, more than three times as much as U.S. Steel made at its peak, and several other Chinese steel makers make more steel annually than US Steel ever did. The pinnacle of American manufacturing scale, achieved only briefly, seems like table stakes for Chinese manufacturing. 

Notably, both the US and China lagged scientifically even as they were becoming powerful economically. In “Science, The Endless Frontier," the famous 1945 report advocating for robust government support for basic research, Vannevar Bush notes that in the 19th century, American industrial progress often involved “Yankee ingenuity” building upon the scientific discoveries of Europeans. While Edison may have invented the electric light, he built upon scientific discoveries of the nature of electricity that were largely European. Between 1901 and 1921, the U.S. accumulated just three Nobel prizes in science, compared to 9 each in France and the UK and 20 in Germany. 

China, similarly, has not necessarily been a leader in scientific progress, even as it has become an economic juggernaut. China has won just one Nobel Prize in science, and doesn’t seem to have done much better with other scientific prizes. China has just two Breakthrough Prizes (compared to several dozen for the U.S.), no Turing Awards, no Fields Medals, no Kavli Prizes, no Abel Prizes, and no Draper Prizes.² As late as 2016, Xi Jinping stated that China’s science and technology foundation “remains weak.” Chinese students and scholars often study abroad at foreign institutions for their training, not unlike how U.S. scientists would often study in Germany 100 years ago.

Growth and culture

Unsurprisingly, daily life in both countries changed dramatically as their economies transformed. Partly these changes were simply the result of adopting what we now consider modern conveniences. In The Rise and Fall of American Growth, Robert Gordon notes how U.S. home life was transformed between 1870 and 1940:

“Instead of relying on candles and kerosene carried into the home, each home was connected to the electricity network that provided electric light and an ever growing variety of electric home appliances. Instead of relying on privies and outhouses and cesspools, each home was gradually connected to two more networks, one bringing in a supply of clean running water and the other taking waste out into sewers. Houses of the rich after 1880 and of the working class after 1910 were increasingly supplied with central heating… Another network, that of telephones, also grew rapidly after 1890.

…By 1940 in urban America, electricity was universal, the percentage of homes with washing machines and electric refrigerators had reached 40 percent, and telephone connections, running water, private bathrooms with modern plumbing fixtures, and central heating had become commonplace.”

A similar transformation took place in China. Access to basic sanitation in China rose from 24% in 1990 to 84% in 2017, and since 1980 hundreds of millions of Chinese have gained access to electricity. In 1980, China had just over 4 million telephones in the entire country, and as late as 1996 there were just 5 phones per 100 people; today, mobile phone adoption in China is universal. Cars per 1,000 people rose from 1.8 in 1980 to around 231 today, an increase of more than 100x. TV, internet, and air conditioning have likewise become commonplace if not ubiquitous.

This transformation spawned highly consumerist cultures in both countries as a large middle class emerged. Charles Morris describes the late 19th century U.S. as the first “mass consumer” society, with Americans purchasing a wide variety of new products, sold at new chain stores like A&P and Woolworths, or through catalogs like Sears and Montgomery Ward. Morris notes:

“History had never seen an explosion of new products like that in the America of the 1880s and 1890s. Branded foods followed the lead of the meatpackers, starting in the 1880s. Store shelves offered Cream of Wheat, Aunt Jemima’s Pancakes, Postum, Kellogg's Shredded Wheat, Juicy Fruit gum, Pabst Blue Ribbon beer, Durkee’s salad dressings, Uneeda Biscuits, Coca-Cola, and Quaker Oats. Pillsbury and Gold Medal wiped out local flour millers.”

One 1925 novel on immigrant life described how acquiring newly available goods inevitably resulted in a desire for more of them. An immigrant family replaces their rags with real towels, then gets dishes and tableware “so we could all sit down at the table at the same time and eat like people," and continues to want more and more:

“We no sooner got used to regular towels than we began to want toothbrushes… We got the toothbrushes and we began wanting tooth powder to brush our teeth with, instead of ashes. And the more and more we wanted more things, and really needed more things, the more we got them.” 

China seems to have gone through a similar evolution; the rise of a Chinese middle class created what has been called “tidal wave consumption” as shoppers began to quickly purchase the products they saw their neighbors buy. A man born to a professional family in China in the 1970s noted that in the 1980s, “We only had meat 2-3 times a week, needed ration coupons to purchase rice, cooking oil, sugar, fabric etc.” By 2012, China had become the largest market for luxury goods, and by 2014 China had just under 20% of the world’s population but roughly 60% of its shopping mall space. Around the same time, an influx of Chinese money made Macau the largest gambling city in the world: six times more money flowed through Macau than Las Vegas. In his 2017 essay “Everything is Worse in China," Tanner Greer describes China as subject to “crass materialism," and “wealth chased, gained, and wasted for nothing more than vain display” at levels far worse than the modern U.S. In his 2014 Age of Ambition, Evan Osnos describes consumerism in China becoming commonplace:

“Shopping, or at least browsing, became a principal hobby. The average Chinese citizen was dedicating almost ten hours a week to shopping, while the average American spent less than four. That was partly because the process was less efficient in China — public transportation, cost comparisons — and partly because it was a novel form of entertainment. A study of advertising found that the average person in Shanghai saw three times as many advertisements in a typical day as a consumer in London. The market was flooded with new brands seeking to distinguish themselves, and Chinese consumers were relatively comfortable with bold efforts to get their attention. Ads were so abundant that fashion magazines ran up against physical constraints: editors of the Chinese edition of Cosmopolitan once had to split an issue into two volumes because a single magazine was too thick to handle.”

At the high-end of the income distribution, both the U.S. and China saw the emergence of a new, ultra wealthy class. Osnos notes that “In 1850, America had fewer than twenty millionaires; by 1900 it had forty thousand”; China likewise has seen a rapid increase in the number of billionaires from virtually none before 2000 to hundreds today. By 2014, China was “the world’s fastest growing source of new billionaires.”

The sense I get from each time and place is of a roiling, bubbling ferment, as the old structures and ways of life are ripped apart and replaced by modern ones. In China, an economy driven entirely by state-owned companies and top-down planning was transforming into a market-driven one, requiring people to learn new rules, new strategies, and an entirely new way of life. In her book about Chinese female migrants, Factory Girls, Leslie Chang describes parents of migrant workers completely unequipped to give advice for the new world that was being created.

“The parents of migrants had terrible instincts. At every stage, they gave bad advice; they specialized in outdated knowledge and conservatism born out of fear… on the job front, their advice was invariably bad.”

Osnos notes that in Beijing, “The endless churn was the only constant," and that he “never passed up an invitation, because places, and people, vanished before you had the chance to see them again.” Other places seemed static and unchanging by comparison: a Chinese friend of Osnos rejected a suggestion to visit New York on a trip to America because “everytime I go, it looks the same.”

Likewise, in the U.S. old institutions were ripped apart and replaced by new ones. While historically America had been a rural nation of small farmers and small businesses, by the late 19th century it was “careening towards modernity," being taken over by huge corporations and impersonal institutions. Morris describes how the “old ways of life, long settled expectations, all the fixed stars for measuring stature and progress, were violently wrenched out of place.”

“The Whig vision of a frictionless, monadlike society of independent artisans and farmers was being swallowed up by its own relentless logic of development. The infrastructure of modernity — fast, cheap transportation; ready access to primary materials like coal, iron, and oil; real-time communications; smoothly flowing channels of finance capital — demanded behemoth-scale institutions, sprawling, soulless, autistically focused on pouring out more steel, more coal, more stocks and bonds, more of whatever they happened to do. During the 1870s, the wrenching forces of modernization achieved maximum torque on the old ways of living and governing and doing business. The captains of modernity, the Carnegies, the Rockefellers, the Goulds, and their admirers; all the people yearning to strike out on new salients, buy more things, behave in new ways; immigrants seeking release from the encrusted semifeudal strictures of Old Europe: they all reveled in the change. Probably half the country hated it.” 

In both countries, this upheaval created huge amounts of opportunity. With the old structures of life falling away, and new ones taking shape, there was much to gain by those willing to take risks, regardless of whether you had the right background or traditional status markets. In both countries new businesses would constantly spring up, fail, and then get replaced by different businesses, and people would quickly move from one opportunity to another. Both nations seemed full of strivers, people who would scramble and scrape to get ahead, and were rewarded for doing so.

In the U.S., many tycoons and industrialists worked their way up from modest beginnings. John D. Rockefeller was the son of a con artist who abandoned his family, and Rockefeller’s first job was as an assistant bookkeeper. Andrew Carnegie was a Scottish immigrant and son of a weaver, born in a one-room house. Charles Schwab, one of Carnegie’s lieutenants and later a major steel executive in his own right, started his steel career earning a dollar a day driving stakes when he was 17. Within 6 months he was managing construction for a large blast furnace. George Westinghouse was the son of a farmer and machine shop owner, and Henry Ford was also the son of a farmer. And while not everyone could become a tycoon, less stratospheric opportunities still abounded. Morris describes a man, Edward Tailer, who “left school to clerk for a New York dry goods importer, but complained about the pay, only $50 a year. By the time he was twenty-one, he was making $450 a year; he jumped to another firm the next year for $1,000, then became a traveling salesman at $1,200, and had his own business when he was twenty-five.” Such stories were far from rare: 

“…Few places have ever been as open to people of talent as post-Civil War America; and in America, no field offered opportunities as unlimited as business. America’s radically different manufacturing culture, its cult of the innovative entrepreneur, its obsession with “getting ahead” even on the part of ordinary people, its enthusiasm for the new — the new tool, the new consumer product — were all unique.” 

Most surprising of all to me was how much of what seems like a quintessentially American culture seems to have been recapitulated in modern China. In Factory Girls, migrants constantly move from one factory to another for new job opportunities, and many work their way up from assembly line workers to managers of entire factories (people changed jobs so often that mobile numbers were the only reliable way to reach them — office or dorm numbers were quickly out of date). Chang notes that migrants’ “tolerance for risk was astonishing. If they didn’t like a boss or a coworker, they jumped somewhere else and never looked back.” Evan Osnos likewise notes in his aptly titled Age of Ambition that “I had come to expect that Chinese friends would make financial decisions that I found uncomfortably risky: launching businesses with their savings, moving across the country without the assurance of a job.” Ambition, which had traditionally been cautioned against, became something to be celebrated:

“The change that startled me most surrounded the word for ‘ambition,’ ye xin — literally, ‘wild heart.’ In Chinese, a wild heart had always carried the suggestion of savage abandon and absurd expectations — a toad who dreams of devouring a swan, as an old saying had it… But suddenly I was seeing references to ‘wild hearts’ everywhere — on television talk shows and in the self-help aisles. Bookstores carried titles such as ‘Great Wild Hearts: the Ups and Downs of Pioneering Entrepreneurial Heroes’ and ‘How to Have a Wild Heart in Your Twenties.’”

(As I understand it, this ferment in China has died down somewhat since the early 2010s, and the Chinese economy no longer has such a “frontier” aspect to it. In Other Rivers, for instance, Peter Hessler notes that it's no longer common for middle-aged people to abandon careers to start new businesses.)

Paired with this celebration of ambition is a culture of individualism and self-reliance. Osnos reports that “The state media, which had once encouraged everyone to be a ‘rustless screw’ in the machine, now acknowledged the new reality of competition: ‘you must rely on yourself,’ the Hebei Economic Daily wrote. ‘Blaze your own path and fight.’” Osnos writes:

“Companies reinforced that message. China Mobile sold cell phone service aimed at people under twenty-five, using the slogan ‘My Turf, My Decision.’ Even in rural areas, where things changed slowly, people spoke of themselves in different ways. Mette Halskov Hansen, a Norwegian sinologist who spent four years in a countryside school, found that teachers were trying to prepare their students for a world in which survival required ‘self-reliance, self-promotion, and the self-made individual.’”

An obsession with self-reliance also peppers Leslie Chang’s Factory Girls: a constant refrain, repeated by migrant girls themselves and in the magazines and media that cater to them, is that “you can only rely on yourself” (not surprising since workers are far from home, with few social ties, and constantly changing factories.) Migrants are constantly taking classes to try to improve themselves and their career prospects: often in English and computers, but also things like injection molding machine operation and how to work in an office.

With institutions constantly in flux and being reshaped, and with culture and social mores untethered, these worlds of immense opportunity also contain an immense number of scams, schemes, and grift. Morris describes the late 1860s U.S. as a “pandemic of corruption” triggered by the huge injection of federal spending, and NPR describes the 1800s as “the golden age of schemes.” The builders of the transcontinental railroad, for instance, built a deliberately winding route for the railroad since they were being paid by the mile, and siphoned even more money from the project by billing the government nearly twice what the railroad actually cost to build in what was known as the Credit-Mobilier scandal. Con man George Parker successfully “sold” the Brooklyn Bridge multiple times, as well as other major landmarks like the Statue of Liberty, Grant’s Tomb, and Madison Square garden. 

Immature financial markets and securities laws (the Securities and Exchange Commission wasn’t created until 1934) were constantly exploited by men like Jay Gould and Daniel Drew, dubbed “robber barons” for their illicit, unscrupulous accumulation of wealth. The market was swamped by patent medicines, most of which were fraudulent (often they were simply liquor). Consumers were expected to be sharp in their interactions, and legal doctrine for commerce was based on “caveat emptor” (let the buyer beware): an unrestrained business environment allowing risky and dangerous enterprises was thought to be necessary for the “‘industrial and commercial development…of a new and expanding nation.” In Fraud: An American History from Barnum to Madoff, Edward Balleisen writes: 

“America’s legal elites tried to balance longstanding norms that upheld truthful commercial speech against their age’s commitment to entrepreneurial activity and rapid economic growth. The latter priorities, encapsulated in the concept of ‘Go-Aheadism,’ counseled leeway for salesmanship and showmanship, respect for the free flow of commercial speech, and reliance on the ability of consumers and investors to look out for their own interests.”

China seems to have (or had) both a similar Wild West aspect and an obsession with economic growth. Chang’s factory girls are constantly at risk from being scammed or grifted by opportunists: bus drivers who take their ticket then kick them off, con-men who trick them out of their money, peddlers selling get-rich-quick schemes or dubious training courses, sales organizations which are really pyramid schemes, factory owners who force them to work for less than minimum wage or for more than the legal number of hours. At the same time, they’re constantly skirting the law themselves: using fake IDs to freely move around, lying about their skills and abilities to get hired, and buying counterfeit diplomas. Chang recounts one interaction with the teacher of a training course for migrants:

“‘In job interviews,’ I said, ‘the girls are often asked if they have experience. They say yes, but actually they don’t.’

I was trying to approach the topic carefully, but Teacher Deng pounced. ‘Yes, and the next question is: “What did you do in your old job?” We teach them the details of the factory so they can answer in a convincing way.’

‘But they’re telling lies,’ I said.

‘Yes.’
‘What if they don’t want to?’

‘It’s up to them,’ teacher Deng said. ‘But people who are too honest in this society will lose out.’”  

This Wild West culture has costs beyond the financial: an earthquake in Sichuan, China in 2008 was especially devastating in part because of corners cut during building construction: some buildings were found to be reinforced with bamboo rather than steel. Similarly, the Great Chicago Fire in 1871 was so devastating in part because of the lack of building codes and unrestricted construction of lightweight wood buildings. 

Both countries ultimately made efforts to rein in harms from corruption and unchecked development. In the U.S., the Gilded Age was followed by the Progressive Era, where reformers advocated for better working conditions, regulation of unlawful monopolies, and laws preventing the sale of adulterated food and drugs. In China, there have been crackdowns on certain types of corruption — theft, embezzlement, and so on. 

While China still has large amounts of corruption in the form of bribes and access money paid to government officials, Yuen Yuen Ang argues in China’s Gilded Age that China has been able to channel its corruption into a pro-development force. Local bureaucrats are often paid by kickbacks, free meals, and so on, but these are linked to their region’s economic development: the more private investment, and the greater the success of local businesses, the greater these types of benefits they can extract. Interestingly, you see the same sort of idea in late 19th and early 20th century US, with the idea of “honest graft.” Tammany Hall politician George Plunkitt noted that he never took money from any government coffers, but would make investments in land and other areas that he knew government projects would make more valuable, another type of corruption that’s coupled to development and economic growth.

Conclusion

I’m far from the first person to point out these resemblances between the U.S. and China. In Age of Ambition, Osnos notes that:

“China reminds me most of America at its own moment of transformation: the period that Mark Twain and Charles Warner named the Gilded Age, when ‘every man has his dream, his pet scheme’... As in China, the dawn of American fortune was accompanied by spectacular treachery… When I stood in the light of a new Chinese skyline, I sometimes thought of Gatsby’s New York – ‘always the city seen for the first time, in its first wild promise of all the mystery and beauty in the world.’”

Yuen Yuen Ang likewise notes the similarities between modern China and the Gilded Age U.S., stating that “both countries underwent a wrenching structural conversion from rural to urban and closed to global markets, producing once-in-a-generation opportunities for the politically connected and enterprising…to acquire fabulous wealth.”

The most interesting thing about these parallels, to me, is that the U.S. and China in many ways were starting from very different places. Prior to its opening up, China’s economy was entirely state-owned and state-planned, and its economic expansion was coupled with unwinding much of the state enterprise machinery, letting small businesses form and markets bloom. 

The U.S., on the other hand, was on the other end of the spectrum. Prior to its economic expansion it had an incredibly weak state, and economy driven by very small enterprises. Its development was accompanied by the creation of large, powerful companies and institutions, and moving away from the “invisible hand” of the market and towards the “visible hand” of exchanges of goods and services mediated within very large organizations.

China’s success came from finding ways to mobilize its huge number of people and hasn’t necessarily been focused on operating at the frontier of efficiency. The U.S., on the other hand, despite its comparatively large population, had a chronic shortage of labor, and much of its development was focused on developing less labor-intensive manufacturing technologies like the American System. China built its success on the back of inexpensive labor, and it remains a middle income country. In the U.S., labor has never been cheap; the U.S. had nearly the GDP per capita of Britain as early as the 1820s, and it had the highest GDP per capita in the world by the 1880s. But despite these differences, the logic of development pulled the U.S. and China along very similar paths. Both countries could exploit very large markets (both at home and abroad), and operated their industries at very large scales in order to do so. In both countries, this required a novel set of institutions that was radically different from what came before, and the transformation that created those institutions spawned cultures with many similarities.

Thanks to Dan Wang for reading a draft of this. All errors are my own.

1. This is a list of “buildings,” not tallest structures, which would include things like the much taller Eiffel Tower.

2. Many of these prizes will be lagging indicators, awarded far after the work done for them, so the lack of awards is probably a better indicator of China’s historical scientific efforts rather than in the last 10-20 years. But it nevertheless shows that China has not been leading scientifically even as it has grown rich. Studies of China’s scientific progress often use metrics like number of papers published or number of highly cited publications, where it often ranks much higher, but it seems notable that it does noticeably worse on the hardest-to-fake metrics like prizes.