Business, Politics & Society

China: The Disruptive Miracle

Paul Krugman

Lesson time 14:29 min

Paul explains China’s rapid economic growth and details how the influx of their exported goods impact economies and rules of trade worldwide.

Paul Krugman
Teaches Economics and Society
Nobel Prize-winning economist Paul Krugman teaches you the economic theories that drive history, policy, and help explain the world around you.
Get All-Access


I went to grad school in the mid-1970s. I had to pick a field of specialization. And I thought to myself, what really matters for the world is development economics. The most important thing is taking the really poor people in the world and helping them make their way up towards a higher standard of living. And I didn't. I didn't do development economics. Because in the mid-1970s, development economics was a very depressing field. It was about trying to understand why developing countries didn't actually seem to develop. It was about why does India stagnate. But all of that changed. First, a few smaller Asian countries-- Korea, Taiwan-- had remarkable economic takeoffs. And then the big kahuna, China, goes into this massive surge. And there's been nothing like it in the history of the world. No one has ever had this much economic growth for this many people over such a sustained period as China has achieved. This is one of the great economic miracles of human history. I think if I were Chinese, I would probably start by saying China is naturally the center of the world. And there was this brief interregnum when these upstarts from elsewhere crowded in on us, but now nature is returning to its proper course. And there's something to that. You have a communist regime which, for the first 40 years of its existence, was totally hermetic, inward-looking, barely dealt with the outside world. But then they reformed. They opened up. They opened up to trade. They opened up to private enterprise. It was not, by any means, a full free market society. It still remains a place where political influence matters a lot. It's still a very crony capitalist place. It's still a very undemocratic place. But they opened it up enough so that enterprise-- people with energy, people trying to make something happen-- had room for their drive, for their talents. And it turned out that there's an awful lot of drive there. How much of it was good policy? I don't actually think there was a whole lot of effective government direction. I don't think that the bureaucrats had any very good idea where they were going. There has been a great willingness to invest in the essentials. The Chinese don't shy away from building roads and railroads and bridges and ports. They don't dither about it. They get the job done in a way that I think we could learn something from. They had a huge reserve of underemployed people in-- essentially peasants with too much time on their hands who they could put to work. And that drives a lot of the growth. They've actually, I think, almost stumbled into taking advantage of some of these economic geography factors. They have an economy which is a series of industrial clusters, groups of firms producing related or the same product all benefiting from all of those forces-- the specialized suppliers, the strong local market, the interchange. So there's one city that produces most of the world's buttons, and there's another city that prod...

Think like an economist

For Nobel Prize-winner Paul Krugman, economics is not a set of answers—it’s a way of understanding the world. In his economics MasterClass, Paul teaches you the principles that shape political and social issues, including access to health care, the tax debate, globalization, and political polarization. Heighten your ability to read between the lines and decipher the underlying economics at play.


Students give MasterClass an average rating of 4.7 out of 5 stars.

Good first class. Really well filmed with great content. I wish we would have stayed more away from current political climate but o'well.

seemed kind of basic information to me. I wish there was more in-depth examples in the lessons.

I appreciate Paul's style, I argued with him through my screen and laughed at his humor. I changed my position on a few issues and had my position strengthened on others. Exactly what I was looking for . (sorry if I was harsh on his political slant before, I knew his position when I started this course). Thanks Paul!

I got confused about some things, but loved the class. Perhaps disclosing political ideals up front might have put things in a little more context. I want to re-watch the first few videos to understand things like the babysitting co-op.. that was a bit lost on me. Thank you!


Diane L.

Thank you for explaining China in a concise, thoughtful manner. I wonder what your take on The Belt and Road Initiative is and how it will impact the future of the Chinese and international economies.

RJane @.

We should not put all the blame on Trump. We should put the blame on the politicians in Electoral College (part of the U.S. Government) who hired and elected Trump as the CEO and the president of United States. Those politicians need Trump’s business skills in the White House and have connections with rich people and big companies and corporations. I hope hiring Trump is for the Americans’ benefits and advantages.


I agree Trump is performing poorly not only by imposing trade barriers, but everything he does is in his own interests n in the long run it will hurt the USA economy. I disagree on the chinese not beign good guys because they r in 4 da money... Say what? Like USA is in 4 world peace n avoiding global warming?? Hint: Every company is in 4 da money, every government is in 4 its own agenda. I wonder what the chinese people in this class has 2 say

A fellow student

Krugman is simply wrong about China. Perhaps he should include the number of people killed per day in the early days of its communist government in his economic theories. We fell for the " economic development zones" which were designated capitalist areas. I was at Sheko and Dalian. Life outside of these areas was very different. Krugman apparently does not want to solve the more complex trade/theft/military problems of today.

Norm C.

I have a different perspective on China, as well as a billion Chinese. I've spent quite some time there and am married into it. China does think that it is the center of the universe, it's name Zhongguo literally means that, the Middle Kingdom. In past times China was the largest economy in the world, they take credit for giving their culture to places such as Japan and Korea. In recent memory I recall a Chinese Premier saying it is China's duty to export their culture to the world. Indeed they export for free books to libraries all over the world. China was open to the world, until the Western world discovered them. The western world was more technically advanced and decimated China through trading opium into China [which was illegal in China] and through more advanced warfare. China invented modern porcelain, which we call China, and gunpowder which the world uses but gave no royalties. Hence China doesn't feel a need to respect other countries patents. China closed it borders long before the Communist Revolution and did so off and on to protect themselves. They were invaded by the Mongols, The Japanese, the West and Russia. A little paranoid after that. After 60 years of civil war, in 1949 the "Communists" took power. They were no more Communist than me but they were given that name because only Russia would help them, after which Chiang Kai-shek with the help of the US skipped out to Taiwan with the Chinese treasury leaving mainland China broke. During the next decades China turned inward and built a huge industrial/military complex, just like America and Russia but the borders weren't truly closed. Visitors were always welcome, it was the home countries of potential visitors who discouraged visits. One day, after China felt strong and secure they started exporting stuff. The Government had looked around and thought "What are our advantages?" Answer: Industry and labor. To get technology and manufacturing smarts they opened their borders to manufacturing partners from all over the world but I would say mostly the "Western World" like the US. So when a US worker complains he lost his job to China, he should look at his own employer and Government. It's his former employer that decided to manufacture in China and it's his Government that created so many roadblocks for a manufacturer that drove them to China. One thing Paul says I totally agree with: China doesn't dither with infrastructure. Well, maybe they do behind the scenes but they obviously dither less than us. My wife's home town which is a small city is divided by a river. It has five large bridges crossing that river. Here outside Vancouver, BC we are still fighting over replacing one of the four crossings. over/through the Fraser River. Going on for years. Sometimes, a central government that has the overall general interest in mind is better than governments that rely on and pander to individual groups.


Chinese does not equal to China. It is quite narrow-minded and myopic for a Nobel Prize winner to ignore such simple and obvious difference.

charles S.

'Pay attention. Don't go for the easy slogans, go for the concrete policy proposals.' Another good, thought-provoking lecture - the last minute is classic.

Robert G.

How does China have more billionaires than anywhere else? The people in China have a different perspective towards there work. They undervalue themselves, they should charge the same labour rates as manufacturers home country.

Robert G.

The person who discovered the wheel probably couldn't spell it. Imagine the royalty check. Imagine getting a letter saying we discovered it was your caveman ancestors that invented the wheel. Just like MacDonalds man. even if you spent a million dollars a day you would never go broke.


It is good and well to trade openly with friendly countries, but would it be advisable to have unlimited open trade with adversarial countries? for instance China? China is not exactly friendly country. For the sake of arguments, if we lose manufacturing base of clothing industries, it may be difficult to resuscitate clothing industries quickly when we need them quickly. Again, if we have war, we can not quickly import clothing from China, it would be difficult cloth the nation, quickly. Shouldn't there be some control to preserve the basic core manufacturing bases in the country? Another issue of trading is that all sort of people needs jobs. Even uneducated (by lack of motivation) needs jobs. The unemployment caused by flight of job beyond the nation is caused by government policy, e.g Word Trade Agreement negotiated by government. Government is responsible for the misery of unemployed people.