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Contents Introduction

We have presented in this paper a new method of estimating total factor productivity (TFP) and capital stocks simultaneously at the same time, and applied it to the growth accounting of the Chinese economy in the national, regional, and provincial levels. The measurement and analysis of this paper can be summarized as follows. The rapid growth in China for the fifteen years since the Reform and Open-up Policy is mainly due to the high and stable level of capital input, the contribution of which is around 50% of GDP growth. The contribution of labor is small around 15% of GDP growth, and it has been declining steadily. The growth of TFP has been fairly high at the rate around 3~4% with a rising tendency, and its contribution to GDP growth is around 40%. The economic growth of regions and provinces in China also depends heavily on the input of capital. The higher growth in the East region is attributed also to the higher input of capital in the region compared with the Middle and West regions. Between the East and the other two regions, the gap in GDP growth has widened recently during the period of the 8th five-year plan. This is partly due to the capital input promoted further in the East region, but mainly due to the TFP growth accelerated drastically in the East region compared with the other two regions. Again between the East and the other two regions, the gap in per capita GDP has widened remarkable especially in the 1990s. The gap in income within rural households, especially between the West and the other two regions, is a crucial factor to explain this regional income disparity. The level of TFP is also quite important, together with the level of capital, to explain the income disparity in China between regions and provinces. The growth of TFP in each province in the 1990s is closely related with such common factors as the expansion of non-state enterprises, the increase in foreign direct investment and, to a lesser extent, the degree of human development, but it still depends much on the region-specific elements.