After more than three decades of average annual growth close to 10
percent, China's economy is transitioning to a 'new normal' of slower
but more balanced and sustainable growth. Its old drivers of growth -- a
growing labor force, the migration from rural areas to cities, high
levels of investments, and expanding exports -- are waning or having
less impact. China's policymakers are well aware that the country needs
new drivers of growth. This report proposes a reform agenda that
emphasizes productivity and innovation to help policymakers promote
China's future growth and achieve their vision of a modern and
innovative China. The reform agenda is based on the three D's: removing
Distortions to strengthen market competition and enhance the efficient
allocation of resources in the economy; accelerating Diffusion of
advanced technologies and management practices in China's economy,
taking advantage of the large remaining potential for catch-up growth;
and fostering Discovery and nurturing China's competitive and innovative
capacity as China approaches OECD incomes in the decades ahead and
extends the global innovation and technology frontier.