Smith around the world

Hong Kong University Business School: Triumph of the Market: What China’s past and present

The lecture at Hong Kong University Business School examined China's patterns of economic growth and analysed the connections to Adam Smith's theories.

The lecture, entitled 'Triumph of the Market: What China’s past and present tell us', as part of the Smith Around the World series, was given by Professor Zhiwu Chen, Professor of Finance and Director of the Hong Kong Institute for Humanities and Social Sciences.

Professor Sara Carter, Head of the College of Social Sciences at University of Glasgow, introduced the lecture.

Also participating in the dicussion were Professor Y.C. Richard Wong, Provost and Deputy Vice-Chancellor of the University of Hong Kong, and moderator Professor Xiadong Zhu, Area Head of Economics.

In this lecture, given on 24 March 2023, Professor Chen argued that the rise to prominence of the southern coastal regions – especially Guangzhou, Hong Kong, Shenzhen, Shanghai and Hangzhou – showcases the power of Smithian growth drivers.

Watch the lecture

Lecture summary

From the Neolithic to the Han dynasty, the southern coastal regions remained as China’s backwaters and did not experience much development. However, from the early Tang dynasty onward, maritime trade launched the South on to a Smithian growth path, transforming China's economic landscape. By the end of the Yuan dynasty, the coastal economies became the country’s economic powerhouse.

Over the subsequent centuries, the South stagnated as the emperors wavered between sea bans and limited maritime trade. Ultimately, though, the country had to open itself for foreign trade as a result of the Opium War, unleashing the forces of unfettered Smithian growth.

Uncompromised freedom to exchange encourages division of labour, which raises productivity and lifts wealth creation; and, as the extent of the market determines the extent of this division effect, globalization deepens specialization and lengthens the supply chain, pushing growth to unprecedented levels. It is the Smithian growth experience that gave the South its distinctive pro-business culture, as opposed to North China’s pro-power culture.