Laura Solanko: The paper examines China's regional development policies designed to improve the standard of living in its central and western provinces. These policies have been associated with increasing GDP per capita but also with decreases in productivity growth and increases in public debt in inland provinces. The authors conclude that relaxing restrictions on labor mobility would be essential in unlocking further growth and improving the overall efficiency of the Chinese economy. They further raise the concern, correctly in my mind, of rising debt levels for future economic growth.
In a country as vast as China, regional disparities are bound to be remarkable if only due to historical, cultural, and geographical reasons. Moreover, the rapid growth from the early 1990s to the early 2000s greatly widened differences in income levels between the coastal provinces and the inland regions. The share of the cost in national GDP increased from 44 percent...