Why is China Growing so Fast?

IMF Working Papers, July 1, 1996

Source details

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 1953 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 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 that brought about a dramatic expansion in foreign trade and foreign direct investment.

Capital accumulation: played an important role throughout the period.
Total factor productivity (TFP): described as the principal driver of the unprecedented growth during the reform period.
Nonstate sector expansion: cited as a key channel for market-oriented reform effects on productivity.
Open door policy: led to a dramatic expansion in foreign trade and foreign direct investment, contributing to productivity gains.

Time frame analyzed: 1953 to 1994.
Emphasis on decomposing aggregate growth into contributions from capital accumulation and productivity growth.
Use of production-function framework and TFP estimates to attribute growth sources.
Subject tags provided by the publication: Financial institutions, Labor, Production, Production growth, Productivity, Stocks, Total factor productivity.