In the 25 years (1953–77) prior to reform, GDP grew at an average annual rate of 5.9 per cent—slightly higher than the global average over the same period. According to Angus Maddison’s (2001) purchasing power parity (PPP) measure, China’s average growth rate was 5 per cent during the period 1950–73, which was not significantly different from the global average of 4.9 per cent during the same period. During the subsequent four years, China’s official GDP growth rate was only 4.2 per cent.
China set out on the road of reform in 1978 and was gradually transformed from a centrally planned to a market economy. In the 40 years between 1978 and 2017, the economy maintained an average annual growth rate of 9.6 per cent. Per capita gross domestic product (GDP) increased from US$490 to US$7,795 in 2009 constant dollars.1
What led to the rapid economic growth in the past 40 years? What problems arose, and why? What will be the future trend of growth? This chapter will attempt to provide brief answers to these questions.