Notes

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2. The essence of their method is to carry out a simultaneous determination of both capital stock series and total factor productivity (TFP) growth. In their method, capital stock series is the result of an iterative calculation process by selecting an arbitrary value for the growth rate of TFP.

3. We noticed that there is a debate recently on China's capital stock series between Holz and Chow (Holz, 2006a Holz, CA. 2006a. New capital estimates for China. China Economic Review, 17(2): 142–85. [Crossref], [Web of Science ®] , [Google Scholar], 2006b; Chow, 2006 Chow, GC. 2006. New capital estimates for China: comments. China Economic Review, 17(2): 186–92. [Crossref], [Web of Science ®] , [Google Scholar]). But this debate is more illustrative than critical, as it clarified a few details in Chinese statistical practice.

4. Wu (2004 Wu, Yanrui. 2004. China's Economic Growth: A Miracle with Chinese Characteristics, London and New York: Routledge Curzon Press. [Crossref] , [Google Scholar]) also uses the perpetual inventory method to construct the capital stock series for 30 provinces in China. But the period his estimation covers is between 1900 and 2000. He assumes that the initial value of capital in 1900 was zero and the rate of depreciation for all regions is 7%. In his more recent work he extends his estimation by using different rates of depreciation for different regions (Wu, 2007 Wu, Y. 2007. “The role of productivity in China's growth: new estimates”. In Manuscript, Australia: School of Economics and Commerce, University of Western.  [Google Scholar]).

5. One of the most important statistical sources for studies of the Chinese economy overseas is from Hsueh et al. (1993 Hsueh, Tien-tung, Qiang Li and Shucheng Liu, eds. 1993. China's Provincial Statistics: 1949–1989, Boulder: Westview Press.  [Google Scholar], 1999) in which provincial data were provided. But they also ignored the data in Historic Data of China National Accounting for Gross Domestic Products: 1952–1995, and A Fifty Years Statistical Compendium for New China.

6. Chow (1993 Chow, GC. 1993. Capital formation and economic growth in China. Quarterly Journal of Economics, 114: 243–66.  [Google Scholar]) took land into account, but we do not in this study.

7. There are primarily three explanations considered for the diminishing efficiency of capital goods with the perpetual inventory method: (1) one-hoss-shay, (2) linear, and (3) diminishing the residual. They correspond to (1) a complete decline of efficiency during the last period of duration, (2) a linear decline of efficiency for each period, and (3) a geometric diminishing of efficiency (Jorgensen, 2001 Jorgensen, Dale. 2001. Productivity (Volume 1), Chinese translation. Beijing: China Development Press.  [Google Scholar]).

8. China began the publication of the annual figure for capital depreciation from 1994 onwards.

9. Therefore, capital accumulation can be classified as either productive or non-productive depending on its final use.

10. Fortunately, the Statistical Yearbook of Shanghai (2001) provides a series of both fixed capital formation and its index, starting from 1952. This dataset makes it possible for us to construct a nationwide implicit deflator for capital goods under certain assumptions.

11. Based on this source, Wang and Yao (2001 Wang, Y and Yao, Y. 2001. Sources of China's economic growth, 1952–99: incorporating human capital accumulation. The World Bank Working Paper [Google Scholar]), He et al. (2003 He, F, Chen, R and Lin He. 2003. Estimation and correlation analysis of capital stock in China. Jingji Xuejia Economist, 5 [Google Scholar]), and Gong and Xie (2004 Gong, L and Xie, D. 2004. Analysis of factors mobility and variation of marginal productivity in China. Jingji Yanjiu (Journal of Economic Research), 1 [Google Scholar]) all constructed the deflator for fixed capital formation between 1952 and 1995.

12. We followed the method by NBS. We compared the resulting deflator for each province during 1991–1995 with those from the Statistical Yearbook of China, and they are almost the same during the same period.

13. We know clearly that this practice may neglect provincial variation in the depreciation rate. But due to the lack of statistics, we have to assume out cross-provincial difference.

14. As Young (2000 Young, A. 2000. Gold into base metals: productivity growth in the People's Republic of China during the reform period. NBRE Working Paper W, : 7856 [Google Scholar]) pointed out, if we estimate post-1978 provincial capital stock in China and the base year is 1952, then the time span of 26 years would make the initial level of capital stock insignificant, and therefore it does not matter which method is better.

15. We could easily extend our estimation to the current year of 2005 and 2006. But we did not do so because the national economic census conducted in the year of 2005 could modify the statistics of 2005 and correct some data of both previous years and years after 2005, therefore figures in Table 3 are statistically consistent.

16. Of course, Beijing's rapid accumulation of capital since the mid-1980s, and mid-1990s in particular, was due primarily to its status as China's capital city, and was largely influenced by political considerations. On the contrary, Shanghai was able to raise its capital stock rapidly mainly because of its economic importance to China.

17. The eastern region includes 11 provinces and municipalities: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan. The central region includes 10 provinces: Shanxi, Neimenggu, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, Hunan and Guangxi. The western region includes nine provinces: Sichuan, Guizhou, Yunnan, Xizang, Shannxi, Gansu, Qinghai, Liaoning and Xinjiang.