Measuring China’s Capital Stock

China’s continuingly high growth for almost three decades has attracted a lot of attention. As a result, a vast literature has emerged.1 While working on China’s economic statistics, researchers have confronted a major problem, i.e. no capital stock data are reported in the Chinese statistical system. Subsequently, researchers have attempted to derive China’s capital stock data by themselves. Earlier works include Zhang (1991), He (1992), Chow (1993), Li et al. (1995), Hu and Khan (1997) and the World Bank (1997a). In these studies, the methods involved vary considerably and so do their results.’ The objective of this chapter is to review previous methods as well as findings, and propose an alternative approach. In particular, the recently released national accounts figures are employed to derive capital stock series for China’s 31 regions. A review of the literature is presented in Section 2.1. This is followed by discussion of the existing methods and description of an alternative approach in Section 2.2. New capital stock estimates for China’s regional economies together with the preliminary analysis are reported in Section 2.3. The relationship between capital formation and growth in China’s regional economies is examined in Section 2.4. Finally summary comments are presented in the concluding section (Section 2.5).