China has long been admired for its ability to achieve double-digit economic growth figures. The economic growth literature describes such phenomena in terms of a ‘catch up effect’.1 The underlying argument is that the rise in the economic welfare and productivity of less developed economies will be larger than those of more advanced economies. Price convergence in this catch-up process is inter alia driven by advances in the economic production capacity of a country, and also by inflation and wage increases. The recent slowing of Chinese economic growth rates bears testimony to this catch-up effect. Moreover, various authors, such as Xu (2014), have pointed out that the current economic growth in China is not sustainable because it is the result not only of catching up but also of distorted factor prices (of, e.g., land and labour) and financial repression (such as regulated interest rates and managed credit allocation).