The book is based on my lecture notes for the course on China's economic development and transition at Peking University. I started to offer this course each semester when I founded the China Center for Economic Research at Peking University in 1993. Before I took the job as the Chief Economist and Senior Vice President of the World Bank in June 2008, I turned the notes into a book, and the Chinese edition was published by Peking University Press in 2009. The book covers the reasons for China's decline from its zenith before the eighteenth century, China's efforts to reverse that decline ever since, and the reforms necessary for China to complete the transition to a well-functioning market economy. In the English edition, I have updated the relevant chapters and included an appendix on global imbalances.

Sustained economic development relies on continual technological innovation and structural transformation. In premodern times technological inventions were based on the experience of farmers and craftsmen. The rate of technological innovation was slow and structural transformation was unperceivable. Most people at that time lived on subsistence agriculture, and only a few of them wereruling class, warriors, and craftsmen. With a large population, China naturally had a large number of farmers and craftsmen and thus enjoyed certain advantages in invention and technological innovation. What's more, China had a relatively advanced market system and upheld Confucian philosophy and a civil service examination system, which improved resource allocation, allowed social mobility, and facilitated national unity. That is why China led the world in many aspects for a very long period.