This paper reviews China’s current economy with an eye to its future prospects and the
kinds of policies that can maximize the probability that China’s growth by the middle of this
century will leave it with a standard of living closer to that of Spain in the year 2000. The
alternative is something more in the direction of a “sick-man” or “chaos” scenario of weak
growth, social and political unrest, and resulting international tensions, not to mention standardof-living
challenges for ordinary Chinese.
The paper’s approach is ad hoc, but the unifying theme to the paper is a skeptical view of
any traditional market-oriented policy proposal that is not first tested against actual conditions in
China’s inherited environment of market failures and incomplete institutions. If Chinese policy
makers continue to address the concerns highlighted in this paper and in some cases if they
adjust their approach—especially in terms of rural grain policies—then prospects for continued
high economic growth in China are quite good indeed.