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Contents Introduction

This paper examines the sources of economic growth in mainland China using the dual approach to growth accounting This approach is useful because of numerous problems that continue to beset Chinese national income accounts data, despite attempts to rectify them. Almost all growth accounting studies conducted on China so far have followed the primal approach, which depends heavily on national income accounts data. The dual approach, by contrast, allows independent price information to play a role. Recent research on Chinese growth has revolved around the following two questions: (a) How significant has TFP’s role been in post-reform Chinese growth? (b) Has TFP growth rate slowed down in more recent years? Examination of the Chinese growth using the dual approach provides the following answers to these questions: (a) In contrast to what Hseih (2002) found for Singapore, the rate of TFP growth for mainland China using the dual approach proves similar to the high TFP growth rates that have been obtained by many researchers using the primal approach. (b) The rate of TFP growth in China has slowed down a little, but still remains high. These results however need to be taken with a grain of salt, mainly because of the weak nature of the data on rate of return to capital in mainland China.