Why Is China Growing so Fast?

Abstract

China has been growing at a spectacular rate in recent years, enabling per capita incomes to almost quadruple in only the last decade and a half. This paper identifies the sources of economic growth in China from 1952 to 1994. While capital accumulation played an important role in China's economic growth throughout the period, it is basically the sharp and sustained increase in total factor productivity that accounts for the unprecedented economic growth observed during the reform period. The productivity gains largely reflect market-oriented reforms, especially the expansion of the nonstate sector, as well as China's "open-door" policy, which brought about a dramatic expansion in foreign trade and foreign direct investment.