In the next few decades, the overall objective of China's long-term development will be to catch up with the advanced developed nations of the world as quickly as we can, and to bring about modernization. In the final analysis, China needs to develop society's productive forces, strengthen the capacity of the state, and enhance the people's standard of living.¹ Nevertheless, the foundation for bringing about these objectives is the enhancement of state capacity. In other words, it is only when the state's capacity to realize its will is enhanced that we can hope to realize these three major objectives and goals. In this chapter, we will focus primarily on exploring the meaning of "state capacity": what role does the realization of state capacity play in bringing about the accomplishment of the state's objectives and goals? How is state capacity measured or computed? What factors affect state capacity? How has state capacity evolved in those countries in the West that operate under a market economy?