The Research on China's Economic Growth

In this paper, we propose that the success story of the Chinese economy between 1979 and 2008 can be best described as followings: the expansion of secondary industry has played the key role in overall growth of GDP in China during the reform period in two ways, that is, the secondary industry has been the key industry in the development processes in China during the reform period, since it is the secondary industry that revealed appreciable increasing returns to scale, which are assumed to be spread over economy as a whole and the second reason is explained by labor reallocation between industries. When surplus labor forces are assumed, transferences of surplus labor into secondary industry with higher productivity might well result in higher overall productivity of an economy as a whole.