China’s future growth depends on innovation entrepreneurs

Weiying Zhang

Journal of Chinese Economic and Business Studies, 2017, vol. 15, issue 1, 19-40

Abstract: The last 30 years of high growth rates were primarily China’s latecomer advantage unleashed by reform and opening. This latecomer advantage provided entrepreneurs with tremendous opportunities for arbitrage. It is the arbitrage activities of entrepreneurs (both Chinese and foreign) that caused a gradual increase in the efficiency of resource allocation, and thus drove high rates of economic growth. However, as the gap between China and developed countries has decreased, the room for arbitrage is shrinking. Solely relying on arbitrage entrepreneurs will no longer sustain high rates of economic growth. Future growth primarily relies on entrepreneurial innovation. Innovation is more institutionally demanding and sensitive. China must deepen reforms of the economic system, political system, legal system, and other aspects to eliminate the systems and policies that obstruct innovation.

Date: 2017
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DOI: 10.1080/14765284.2017.1287540

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