The economy of East Asia comprises 1.6 billion people (20% of the world population) living in six different countries and regions. The region includes several of the world's largest and most prosperous economies: Taiwan, Japan, South Korea, China, Hong Kong, and Macau. It is home to some of the most economically dynamic places in the world, being the site of some of the world's most extended modern economic booms, including the Taiwan miracle (1950–present) in Taiwan, Miracle on the Han River (1974–present) in South Korea, Japanese economic miracle (1950–1990) and the Chinese economic miracle (1983–2010) in China.
East Asia's economic prominence has grown significantly in recent years, increasing its importance and influence in Asia and the world economy. Recent developments have led to an expanding cosmopolitan middle class. East Asian countries are vital contributors to central global communications and trade networks, developing relations with other nations, including those of the Western world, making them a significant contributor to the global economy. The region's economic success was referred to as "An East Asian Renaissance" by the World Bank in 2007.
Since the early 20th century, East Asia has been home to two of the world's largest economies, with mainland China and Japan being the second and third largest, respectively. Since the middle of the twentieth century, capitalism has been integrated with the Confucian nature of Oriental East Asia. In defiance of an array of sociopolitical challenges, the East Asian economies turned into a modern economic miracle. Sustained efforts of veering East Asia into a capitalist direction have created remarkable outcomes in terms of resilience, dynamism, growth, and economic prosperity.
Even as late as the mid-twentieth century, East Asia remained nonindustrial, poverty-stricken, and torn by the ravages of World War II. Since the 1960s, Japan, South Korea, Taiwan, Hong Kong, Macau, and mainland China have achieved a modern economic takeoff leaving the economic rise of modern East Asia to become one of the most important economic success stories in modern world history. Despite decades of setbacks and turmoil, East Asia is now one of the world's most economically prosperous and technologically advanced regions.
Rapid modernisation, and a focus on high technology, have allowed East Asia to register rapid economic growth. The region is home to some of the world's most affluent nations and sees high standards of living. Japan saw rapid re-modernisation in the aftermath of World War II and, during the 1950s and early 1960s, increased its dominance in global trade, aided by its focus on innovation in automobiles and advanced consumer electronics, making it the world's third-largest economy after the United States and mainland China.
The rise of the Four Asian Tigers, including South Korea, Taiwan and Hong Kong, was characterised by unprecedented growth during the 1970s–1980s, placing themselves among the world's most prosperous and dynamic economies. Mainland China's continued growth and economic development, aided by its entry into the World Trade Organization in 2001, has made the country a significant contributor to the East Asian economy and increased its recognition as a major player in the world economy. In addition, South Korea and Taiwan are among the largest manufacturers of consumer technology globally, while Hong Kong is widely recognized as a leading worldwide financial centre.
History Ancient East Asia was economically dominated by two states known today as China and Japan. These two ancient states traded abundant raw materials and high-quality manufactured goods, exchanged cultural ideas and practices, and had military conflicts with each other throughout the centuries.
China
For much of East Asia's history, China was the largest and most advanced economy in the region and globally as a whole.Dahlman, Carl J; Aubert, Jean-Eric. China and the Knowledge Economy: Seizing the 21st Century . WBI Development Studies. World Bank publications. Accessed January 30, 2008.Angus Maddison. Chinese Economic Performance in the Long Run . Development Centre Studies. Accessed 2007. p.29 See the "Table 1.3. Levels of Chinese and European GDP Per Capita, 1–1700 AD" in page 29, Chinese GDP Per Capita was 450 and European GDP Per Capital was 422 in 960AD. Chinese GDP Per Capita was 600 while European was 576. During this time, Chinese per capita income rose by about a third. Historically from the 1st until the 19th century, China was one of the leading global economic powers for most of the two millennia. The history of trade in East Asia was largely shaped by the history of trade within Ancient China. During the Han dynasty, China gradually became the largest economy in the ancient world.
Han China hosted the largest unified population in East Asia, the most literate and urbanised, the most economically developed, and the most technologically and culturally advanced civilisation in the region at the time. Han China had economic contacts with Persia and the Roman empire, trading silk, minerals, and spices through the famous Silk Road.
During the Tang dynasty, China had a multitude of religions that invigorated the many dynamic aspects of Tang cultural and intellectual life. This productive economy generated substantial tax revenues to fund a competent, credible, and efficient political bureaucracy that administered a vast empire and possessed the world's most advanced science and technology. By 1100, the Song dynasty hosted a population of almost 100 million people while large cities had over 1 million inhabitants, a sophisticated medieval economic system boasting the use of paper money (written business contracts, mercantile credits, checks, promissory notes, bills of exchange), and was a maritime naval power with extensive and flourishing trade contacts with Southeast Asia. For much of East Asia's economic history, China was one of the most developed economies. After the Fall of the Western Roman Empire, for a thousand years, from 500 AD to 1500 AD, China was the wealthiest country in East Asia in the aggregate total in addition to per capita income.
According to The Economist, China was not only the largest economy for much of recorded history for 1800 years of the past two millennia, but it was the world's largest until the end of the 15th century boasting the world's highest per capita income and most advanced technology at the time. Throughout this period, China outperformed its fellow East Asian and distant European counterparts regarding technological development and economic growth, culminating in its ability to maintain a massive territorial empire throughout succeeding medieval Chinese dynasties.
Despite economic stagnation after 1450 and the rise of early modern Europe, China's economy remained the world's largest from the 1500s until 1820 as the world's most populous country and remained the world's largest economy up until 1885, a figure higher than the US economy at the height of its economic dominance after World War II. China was the wealthiest part of the world from 1200 to the 1300s — aside from Italy until the European Renaissance took off during the late Middle Ages and the modern Western World and Japan overtook China during the mid- and late 19th century. China accounted for around one-quarter of the global GDP until the late 1700s, and approximately one-third of the global GDP in 1820 as the Industrial Revolution was beginning in Great Britain. China's GDP in 1820 was six times as large as Britain's, the largest economy in Europe — and almost 20 times the GDP of the nascent United States.
Japan
Ancient Chinese coinage and money was introduced to Japan about 1500 years ago during the early Han dynasty. The Japanese did not mint coins from copper and silver until 708 AD and paper money was introduced in 1661. Japan during the Yayoi period engaged in intensive rice agriculture in paddy fields introduced from southern China via the Ryukyu Islands which developed a manorial feudal economy similar to that of medieval Europe.
As the Yayoi economy used no form of currency, bartering was used to trade goods and services, predominantly farm implements. Yayoi farmers fished, hunted, gathered and farmed. The introduction of a highly advanced form of rice cultivation using irrigation propelled the Yayoi economy.Earlier Start for Japanese Rice Cultivation, Dennis Normile, Science, 2003 (archive) Terraced paddy fields made the Yayoi more successful in the growing of rice that surpluses were often produced. The agricultural surpluses produced by the manorial Yayoi economy stimulated Japan's early handicraft industries and the establishment of urban villages and permanent settlements started to appear in the Yayoi agricultural community as cities didn't exist at that time.Pearson, Richard J. Chiefly Exchange Between Kyushu and Okinawa, Japan, in the Yayoi Period. Antiquity 64(245)912–922, 1990.
As the Yayoi economy became more sophisticated, Japanese craftsmen began to venture in metallurgy and began to develop their own tools such as swords, arrowheads, axes, chisels, knives, sickles, and fishhooks. Decorative items such as ceremonial bells and mirrors were used as religious rituals and status symbols. As the Yayoi population increased, the society became more stratified and complex. They wove textiles, lived in permanent farming villages, and constructed buildings with wood and stone. Yayoi merchants and farmers also accumulated wealth through land ownership and the storage of grain. Such factors promoted the development of distinct social classes. Contemporary Chinese sources described the people as having tattoos and other bodily markings which indicated differences in socioeconomic status.
In ancient Japan, a person's wealth was described in kokus and measured in bales of rice. One koku was of rice. As rice signified money, large quantities of rice had to be stored and distributed nationally. Moreover, the imperial Japanese tax system was based on rice and it taxed peasants with rice and paid the salaries of high ranking government workers with it. Additional trade goods made from rice such as sake, rice wine, and vinegar were used as commodity money. Soon, rice played an important role in Japan's economy and was used as currency for more than a millennium. Small amounts of trade Japan and China began around 2000 BC when Chinese merchants sailed across the East China Sea to Japan in wooden canoes. The two nations increased their economic relations greatly by the 1st century AD when Japanese envoys were sent to Korea and China. Japanese silk was in high demand by the ancient Koreans and Chinese as it was used to produce clothing. Bronze tools and gold was traded with the Koreans while Chinese traded bronze mirrors, bells, swords, spearheads, rice and gold ores mined in the Japanese mountains.