The global economic balance of power has transformed in the past two decades. Once dominated by the West, the world economy is now being reshaped by Asia, especially by China.
A 2025 ranking of the world's 30 largest economies shows that China's labor productivity, measured as GDP per hour worked, soared about 170 percent, from $11 in 2005 to $30 in 2024. This spectacular performance far exceeds the improvements recorded by other major economies during that period.
China's ascent is in stark contrast to the stagnation in many European economies during the same period. According to the same 2025 ranking, the labor productivity was barely noticeable in several Western economies. Italy recorded a 2 percent rise, the United Kingdom roughly 10 percent growth, and France and Norway around 14 percent each. Such modest increases over 20 years reflect structural inertia rather than cyclical downturns.
Broadly speaking, productivity growth has remained weak across Organization for Economic Cooperation and Development economies. In 2024, productivity across OECD countries (excluding Turkiye) grew about 0.6 percent on average, with Europe underperforming and the eurozone registering a weak recovery. This year's underperformance underscores that the European slowdown is deep-rooted and continues to weigh on structural competitiveness.
The divergence between Asia and Europe is not merely statistical noise, but a signal of the systemic differences in development strategies, economic structures and long-term commitments. Asia's surge in productivity is underpinned by sustained high investment rates, often reaching 30 to 40 percent of GDP in many countries, which enable modernization of infrastructure and industrial capacity.
In addition, many Asian economies are not burdened with outdated industrial legacy because they built modern, efficient production systems from scratch. They integrated into global value chains, enabling technology transfer, managerial know-how, competitive pressure and rapid quality improvements.
Massive urbanization throughout Asia has shifted labor from low-productivity agriculture to manufacturing and services, significantly raising the average output per hour. Equally important has been the policy consistency in Asian countries: long-term industrial strategies focused on education, export competitiveness and technological upgrading.
In China, for instance, the combination of a vast labor force, deep capital investment, expansion into high-tech sectors and modern logistics and infrastructure networks created a uniquely favorable environment for a productivity revolution.
European economies, by contrast, appear fatigued. After the global financial crisis of 2008, investment slowed, risk appetite declined, and many countries entered a prolonged phase of underinvestment. Labor markets were affected by demographic decline, aging populations, shrinking workforces and rising social expenditures. High energy costs, elevated input prices, regulatory burdens, rigid labor policies and high taxation have undermined competitiveness, dampening incentives to modernize production or shift toward high-value-added sectors.
Source: China Daily
