Abstract
In 1978, at the outset of its economic reform, China was the world's tenth largest economy, with a GDP of about $150 billion. By 2005, however, China's economy, at $2.2 trillion, had grown to become the fourth largest in the world, behind only the US at $12.5 trillion, Japan at $4.5 trillion, and Germany at $2.8 trillion. In this article, researchers describe the basic model that they use to organize on their analysis of China's catch-up prospects. Next they examine the magnitude of the relevant productivity gaps, and they focus on the Chinese economy's dynamic catch-up processes for reducing both the international and the internal gaps. Finally, researchers focus on the political economy of China's economic growth, and they draw various conclusions from their analysis, including some policy implications. A key finding of this paper is that the main productivity gaps -- the international gap, the gaps across regions within the industrial economy, and the industry-agriculture and industry-services gaps -- all exhibit diminishing contributions to productivity growth as the gaps narrow.