Economic Reform and Structural Change

This chapter examines China’s experience with structural change during three distinct periods of economic reform and growth: 1978–1995, 1995 through to about 2010, and 2010 to present. In each case, the chapter finds that the pattern of structural change is related to the choices made by policy makers with respect to reform and market transition. The first period saw a shift towards a more labour-intensive output basket, a structure that was more in line with China’s underlying comparative advantage, while the second period witnessed a move ‘upstream’ toward more capital and skill-intensive industries. Since 2010, China has begun to move toward a service economy and embarked on a new era of structural change. Each of these periods offers specific ‘lessons’ about the relationship between policy and structural change. The chapter concludes with a discussion of these lessons and a number of generalizations that apply to China’s experience as a whole.