Why is China Growing So Fast?

International Monetary Fund

• Publisher: INTERNATIONAL MONETARY FUND
• Year: 1997
• eBook ISBN: 9781557756411

NONE

Why Is China Growing So Fast?

In 1978, after years of state control of all productive assets, the government of China embarked on a major program of economic reform. In an effort to awaken a dormant economic giant, it encouraged the formation of rural enterprises and private businesses, liberalized foreign trade and investment, relaxed state control over some prices, and invested in industrial production and the education of its workforce. By nearly all accounts, the strategy has worked spectacularly.

While pre-1978 China had seen annual growth of 6 percent a year (with some painful ups and downs along the way), post-1978 China saw average real growth of more than 9 percent a year with fewer and less painful ups and downs. In several peak years, the economy grew more than 13 percent. Per capita income has nearly quadrupled in the last 15 years, and a few analysts are even predicting that the Chinese economy will be larger than that of the United States in about 20 years. Such growth compares very favorably to that of the “Asian tigers”—Hong Kong, Korea, Singapore, and Taiwan Province of China—which, as a group, had an average growth rate of 7-8 percent over the last 15 years.

Curious about why China has done so well, an IMF research team recently examined the sources of that nation’s growth and arrived at a surprising conclusion. Although capital accumulation—the growth in the country’s stock of capital assets, such as new factories, manufacturing machinery, and communications systems—was important, as were the number of Chinese workers, a sharp, sustained increase in productivity (that is, increased worker efficiency) was the driving force behind the economic b...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• Why Is China Growing So Fast?
• The Economic Issues Series
• Biography