Economic Freedom, Economic Growth, and China

Cross-country data and the Index of Economic Freedom show that improvements in economic freedom are associated positively with real gross domestic product (GDP) growth, a finding at odds with the situation in China. The Chinese economy grew about 10 percent per year during the sample period, but its rapid economic growth was accompanied by a relatively undeveloped legal and financial system, lack of economic freedom, and a high level of corruption. China's rating for economic freedom is regularly below the world average and has not improved over time. Ranked only 124th in the 2008 Index of Economic Freedom, China seems to be an exception to the rule in the realms of law, institutions, economic freedom, and economic growth.