Wealth Creation and Growth

Starting off with a self-centred and import-substituting economy in 1978, China has come a long way to its current status as the world¿s largest exporting nation, with a GDP only to be topped by the United States of America. Consequently, China is often hailed as an example for the benefits of markets, trade and globalisation, yet, the period of rapid growth started around 1980, more than a decade before trade liberalisation. Aim of this analysis is, accordingly, to examine the influence of institutional factors to Chinese growth. Regional competition and experimentation governed under Chinäs regionally decentralised authoritarian (RDA) regime effectively created economic incentives and alleviated informational problems. Furthermore, the link between regional performance to officials¿ promotion and tournament-like regional competition provided high-powered incentives for officials to initiate most of the successful economic reforms in China on regional level.