China’s Productivity Boom: The Contribution of Restructuring to Growth and Competitiveness

China’s transition to a market economy has meant rapid productivity growth and a shift of resources away from traditional state-owned enterprises (SOEs) to high-producing privately owned firms, both foreign and domestic. Meanwhile, restructuring has made SOEs more productive as well, and multinational companies should no longer view China as an untapped market opportunity, but as a strong competitor. However, China’s ability to sustain its current level of growth depends on its capacity for innovation and its flexibility in adapting to new products and processes.

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