This chapter examines China’s prolonged growth slowdown by analyzing the critical role of productivity improvement, particularly total factor productivity (TFP), in driving economic growth. It highlights that between 1978 and 2007, rapid TFP growth – averaging over 4 percent annually – underpinned China’s impressive GDP expansion, largely due to effective bottom-up institutional changes, agricultural productivity gains, labor reallocation, and domestic trade liberalization. In contrast, since 2007, TFP growth has decelerated to about 1 percent per year, as government policies have shifted toward top-down industrial directives and centralized resource mobilization, resulting in misallocation of capital and reduced market-driven reforms. The chapter uses growth model simulations to demonstrate that even with increased investment rates, the decline in TFP remains the primary constraint on GDP growth. Looking ahead, it projects that sustaining or improving future GDP growth hinges on enhancing TFP through decentralization, renewed market-based reforms, and greater engagement with international technology diffusion.

This chapter examines how the events of summer 2021 marked a decisive turning point in China’s economic system. Barry Naughton argues that, while the reform-era system emphasized decentralized decision-making and robust growth incentives, a series of abrupt regulatory actions in 2021 abruptly constrained the private sector and redefined policy objectives. The crackdown – targeting major private enterprises, real estate, and tech giants – catalyzed a shift toward a system where economic decisions are heavily politicized, with competing objectives that dilute growth incentives. This new framework, which prioritizes political and social goals such as common prosperity over pure market efficiency, is expected to reduce productivity and weaken policy credibility. The chapter concludes that the summer of 2021 represents a point of no return, signaling a qualitatively different economic regime that may have lasting negative implications for China’s dynamism and long-term growth.

This chapter examines China’s transformation from economic isolation to deep global integration. The authors identify three distinct phases in China’s trade openness: a corrective phase (1980–1992) that raised openness from below-norm levels; an expansion phase (1992–2006) where trade openness and a growing trade surplus exceeded international norms; and a normalization phase (2006–2021) with a gradual reduction toward a typical openness level. The analysis extends beyond traditional measures by evaluating export sophistication – revealing a significant post-2006 surge in the technological complexity of China’s export bundle – and by proposing a broader openness index that integrates FDI-related value-added activities. The chapter also discusses structural factors behind persistent trade imbalances, including financial system imperfections and competitive savings motives, and contextualizes these trends within the framework of China’s “dual circulation” strategy. Overall, the study provides insights into the evolving quality and quantity of China’s economic openness and its implications for future global integration amid rising geopolitical tensions and domestic policy shifts.

This chapter justifies the book’s moral foundation, rooted in sentientism. Sentience, understood as the ability to feel, is interpreted as the capacity for welfare. The chapter also identifies the species possessing this ability and, therefore, belonging to the moral community.

This chapter presents the social welfare function approach. It discusses how to directly incorporate animal welfare into the social objective. It explores the distinction between utility potentials, introduced earlier, and moral weights, introduced in this chapter, while also introducing the challenges of population ethics.

This chapter introduces a novel measure of state-owned enterprises (SOEs) in China using an equity network perspective. Leveraging a comprehensive firm registration dataset from SAIC, the authors construct dynamic ownership trees that trace direct and indirect government control from central, provincial, and city levels. By setting various ownership thresholds (100 percent, 50 percent, 30 percent, 10 percent, and >0 percent), the new measure reveals a substantially larger pool of SOEs than traditional self-reported indicators from the Annual Industrial Survey. The analysis uncovers systematic misreporting issues in existing definitions and demonstrates trends in state ownership, including a shift toward decentralization and increased indirect control over time. The findings offer fresh insights into the structure of China’s state capitalism and the evolving role of government in the economy, laying a robust foundation for future research on the economic impact of state ownership in China.

This chapter begins by exploring the motivations behind pet ownership, then introduces a simple economic model in which a pet owner decides on medical expenditures and pet insurance. It concludes with a broader discussion on the economics of pets.

This chapter examines the evolution of China’s innovation system over the past thirty-five years, detailing how government policies, R&D investment, and strategic international engagement have spurred a remarkable surge in patent activity and technological advancement. It outlines the transition from a weak, planned economy to one where domestic enterprises dominate innovation, emphasizing the shift from quantity-focused utility model patents to an increasing quality of invention patents. The analysis highlights the role of FDI and regional dynamics in boosting local innovation while comparing domestic and foreign patenting trends. Key external challenges are discussed, including the impacts of the Belt and Road Initiative, the Sino-US trade war and technology decoupling, and the disruptions caused by the COVID-19 pandemic. Looking forward, the chapter proposes future directions in sectors such as electric vehicle batteries, semiconductors, and digital startups, stressing that achieving sustained independent innovation will require enhanced basic research, collaborative international efforts, and a move beyond reliance on government policy alone.

This chapter presents an economic model of the meat paradox, where consumers experience both pleasure from eating meat and disutility from harming animals. It incorporates a cognitive dissonance framework to examine how individuals manage this psychological conflict. The chapter explores the effects of meat taxation within this model and concludes with a broader discussion on its key assumptions and implications.

This chapter explores the interplay between China’s economic transformation and its shifting demographic landscape over the first two decades of the twenty-first century. It examines how an initially favorable age structure and abundant labor drove a period of material abundance and rapid growth, yielding a significant lifecycle surplus. Using a lifecycle approach with National Transfer Accounts, the authors analyze changes in labor income and consumption profiles, revealing that while early decades witnessed rising surplus driven by robust income growth and low dependency, the 2010s saw consumption outpacing income amid accelerating population aging. This resulted in a sharp contraction of the aggregate lifecycle surplus and a declining effective support ratio. The analysis further decomposes the impacts of changes in per capita income–consumption patterns versus demographic shifts, projecting that continuing aging will likely exhaust the surplus in the coming decades, posing critical challenges for China’s future economic and social policies.