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The rapid pace of economic growth in
China has been unprecedented since the start of economic
reforms in late 1970s. It has delivered higher incomes and
made the largest single contribution to global poverty
reduction. Measured by international poverty lines, from
1978-2004, the absolute poor population in rural areas has
dropped from 250 million to 26.1 million. Such gains are
impressive and have been driven largely by a set of
market-oriented institutional reforms, strong investment,
and effective adoption and application of various knowledge
and technologies, especially foreign ones through trade and
foreign direct investment. While enjoying tremendous
success, China also faces many challenges that need to be
addressed to sustain its long-term development. These
include weak institutions, low overall educational
attainment, weak indigenous innovation capacity, poor links
between research and development and industries, and so on.
This paper provides an analysis of some strengths,
weaknesses, opportunities, and challenges to China's
knowledge economy in the areas of economic incentives and
institutional regime, human capital, innovation system, and
information infrastructure.
