Opening up, Market Reforms, and Convergence Clubs in China

International audienceThis paper evaluates the relationship between initial government policies and the emergence of convergence clubs in post-reform China. We test the structural stability of a global convergence equation using China's provincial data over the period 1985-2000. We find that the provinces cluster around two basins of attraction defined by initial opening-up. Domestic market reform exerts a positive and significant influence on provincial economic growth but have no threshold effect. The two convergence clubs exhibit strikingly different growth behaviors, suggesting that the roles of some growth-promoting factors such as human capital and infrastructure depend on whether an openness threshold is passed