China's Economic Growth: Trajectories and Evolving Institutions

Jun Zhang

in Southern Engines of Global Growth

Published in print April 2010 | ISBN: 9780199580606
Published online May 2010 | e-ISBN: 9780191723353 | DOI:

Series: WIDER Studies in Development Economics

China's Economic Growth: Trajectories and Evolving Institutions

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This chapter investigates the institutional reason underlying the change in the trajectory of economic growth in post‐reform China and argues that the trajectory of growth was much more typical during 1978–89 than during the post‐1989 era. In the former period, growth was largely induced by institutional change in agriculture and the emergence of a non‐state industrial sector that generates equality. In the latter period, growth was triggered by the acceleration of capital investments under an authoritarian decentralized hierarchy within self‐contained regions. Such a growth trajectory accelerates the deepening of capital, deteriorating total factor productivity, and leads to rising regional imbalance. This chapter further argues that the change in the trajectory of growth is the outcome of changes in political and intergovernmental fiscal institutions following the 1989 political crisis.

Keywords: economic growth; political institutions; China; capital investments; 1989 political crisis

Chapter.  6562 words.  Illustrated.

Subjects: Economic Development and Growth

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