China has more potential to boost productivity than Japan in the 1950s and South Korea in the 1960s. Whether that’s realized is a $15 trillion question.

In industries such as financial services and telecommunications, where barriers to entry and preferential policies for state-owned enterprises deter competition, China remains far behind developed-world competitors.

Prospects for an era of productivity-led expansion hinge on President Xi Jinping’s one-year-old policy blueprint to spur market forces and restructure the financial system so capital is allocated on the basis of potential returns rather than public directive. Underscoring the challenge: productivity growth has plunged after a post-financial crisis stimulus binge.

“The potential is still very great,” said Zhu Xiaodong, an economics professor at the University of Toronto. “My home town is Wuhan and I keep comparing it withShanghai. It’s not very poor now, but to reach Shanghai’s level will take 10 to 15 years -- that’s a lot of growth.”

China’s productivity is about 13 percent the U.S. level, way below Japan’s 56 percent in 1950 or South Korea’s 43 percent and Taiwan’s 50 percent in 1965, Zhu wrote in a 2012 paper. Japan’s productivity soared to 83 percent of the U.S. level by 1975, while by 1990 South Korea’s reached 63 percent and Taiwan’s 80 percent.

David Fuller's view

Neither China nor any other developing economy has to reinvent the wheel in order to follow the path of successful international corporations, including increasing productivity.  It can and probably is studying the development process of all successful economies, including those within Asia.  The bigger challenge will be to control corruption while creating an environment that encourages entrepreneurs.  Alibaba is a very big step in the right direction.