The Evolution of China’s Industrial Structure 1990–6: Implications for China’s Future Development

It is generally accepted that China will be a great competitor to the Western industrialized countries in the twenty-first century. Is this a reasonable opinion? Is it true that China’s size and growth rate are important in measuring its potential as a competitor? Two questions should be considered. First, is the growth rate of the Chinese economy based on productivity gains? If economic growth is sustained only by an increase in inputs, it will be short-lived (Krugman, 1994). Second, is the high growth rate being followed by a rationalization of the Chinese industrial structure?