China’s Rapid Growth: Evidence from City-Level Data

China was one of the fastest growing economies in the 1980s. The average annual growth rate of (inflation-adjusted) GDP for China from 1980-90 was 9.5 percent. The corresponding growth rate for the world as a whole was 3.1 percent (World Bank 1992, 221,. table 2). The growth rate for China in 1992 was 12.6 percent. The rapid growth in China is obviously related to its relentless (but not nec-essarily consistent) pursuit of economic reform, which has unleashed produc-tive forces previously suppressed by rigid central planning. One particularly important component of the reform program is China’s open door policy. In-deed, China is literally a textbook example of export-led growth.’ The modest objective of this paper is to ascertain answers to two questions. First, what is the contribution of exports and foreign investment to rapid indus-trial growth in China? Second, is there any spillover effect from exports or foreign investment? Because the 12-year reform period is relatively short, it is difficult to do statistical analysis based on the limited number of aggre