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This paper explores the forces that shaped China's interprovincial inequality in the last five decades of Communist rule. In so far as the change in interprovincial inequality is the result of differential growth in provincial GDP per capita and provincial economic growth, it may be decomposed into contributions by total factor productivity (TFP) and other factor inputs. A new method is introduced to make this decomposition. Care is exercised in taking into account problems of Chinese official data when implementing the decomposition analysis. The findings suggest that TFP and factor inputs exerted different and sometimes opposing effects on interprovincial inequality in the Maoist and reform era. The increase in inequality from the mid 1960s to the mid 1970s is due to the contribution of TFP overwhelming that of physical capital. The opposite is true for the 1980s. The increase in the 1990s is mainly driven by the skewed distribution of investments in favor of the richer coastal provinces reinforced by the increasing contribution of TFP. [ABSTRACT FROM AUTHOR]

Chinese economic growth statistics are controversial. In recent years they have been challenged on technical grounds as well as on suspicions of data falsification. Angus Maddison in a 1998 OECD study goes further in that he questions China's long-run growth statistics and proceeds to provide an alternative time series. His average annual real GDP growth rate for China in the reform period (1978 through 1995) is 2.39 percentage points below the official one. Angus Maddison's revisions were subsequently incorporated into the Penn World Tables; his GDP estimates for China, thus, have found their way into numerous cross-country studies. This paper critically examines the validity of Angus Maddison's revisions to official data. [ABSTRACT FROM AUTHOR]