China's economic growth in an international context

China is widely regarded as the most rapidly growing economy in the world o ver the past two decades. A growing number of studies, however, suggest tha t the official growth rate of 9.4 per cent for the years from 1978 through 1995 is biased upwards. No consensus has yet emerged on the degree of overs tatement. Estimates range from as little as 1.2 percentage points per annum , which would still leave China near the apex of the world growth sweepstak es, to as much as 3.8 percentage points per annum, which would knock China off the list of the world's ten most rapidly growing countries. The princip al source of growth has been factor accumulation, almost all due to China's high rate of investment, which has been financed almost entirely with dome stic savings. Sustaining China's growth will require both maintaining the h igh rate of savings by households, who have emerged as the principal source of savings in the reform era, and increasing the contribution of technolog ical progress. The most serious threat to sustaining economic growth is the possibility of a run on one or more of the large state-owned banks, severa l of which are insolvent. That would likely lead to a collapse of credit an d thus a major recession, something not experienced in China for almost fou r decades.