2. How China sustain International Catch-Up? Ability to expand its capacity to create and absorb new domestic and imported technology Through political economy, China ability to employ new technologies, accumulate capital and reallocate labor. China had high science and technology (S & T) takeoff with rapid rise in R & D.

3. Political economy Important for economic growth because it defines the structure that shape economic performance. Property rights are needed to strengthen incentives to accumulate and efficiently utilize economics resources with both labor and capital Institutional reforms are relevant to China’s economy to accumulate and allocate resources to reduce productivity gaps. 1 st bundle: change low-productivity sectors to high income sectors. (eliminate residency registration [hukou system] and creation of insurance system). 2 nd bundle: facilitate development and diffusion of technologies, restructure enterprise and efficient capital utilization

4. Sustainability of China Institutional Reform China momentum is likely to continue. 1 st : record over 20years; their political leadership continue engaged in it 2 nd : China law and nation political choices 3 rd : China as fast emerging and its growing force of entrepreneurs; expect political system to pursue policies that support sustained economic growth.

5. Implication & Conclusions China economics is progressing at a rapid pace. Large different in productivity between coastal industry and agriculture Key findings indicate all exhibit diminishing contribution to productivity growth as the gaps narrow. As it further diminish, productivity growth that occur rapidly will slow down. Need to rely less on coastal industry; required policies to reduce productivity gaps. China economy will be in inverted-U curve, reducing disparities in production and income. China growth emphasis from coastal industries should be shift and backward sectors should be top priority.

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