But most notably, it has been backed by consistently growing total factor productivity. Efficiency has benefited greatly from the adoption of technologies and know-how from leading advanced economies.2 As occurs in any economic development process, China may be facing diminishing returns from already implemented liberalization policies.
Unexploited opportunities are suggested by the relatively low size of consumption and the service sector in China’s economy in comparison with many nations. Hence, the sustainability of high growth rates and further widening of benefits to society would seem to require more structural changes. In particular, inefficiencies prevailing in several markets may be too costly to allow for continued high rates of economic expansion.