Journal of Economic Perspectives, Vol. Journal of Economic Perspectives
China’s real GDP per capita has increased at a rate of nearly 9 percent annually since the start of its economic reforms in 1978, the fastest rate of growth that any large country has sustained for such a long period of time. Output is equal to the number of workers multiplied by productivity per worker. Thus, China’s dramatic growth can be broken down into the increases of the size of working-age labor force as a proportion of the population (or, in other words, the decrease of the dependency ratio) and improving labor productivity. In turn, labor productivity can be broken down into factors such as rising human capital and the reallocation of labor to more efficient sectors.