China is a middle income country and - measured at PPP exchange rates - the largest economy in the world. China's phenomenal economic growth has mostly come about from investment and copying technologies from Western firms - as it exhausts that potential, can it make the change to innovation-led growth?

Economist Fabrizio Zilibotti presents his work on what China needs to do, and why this matters for the whole world. In order to make a successful transition to innovation-led growth China must address the need for institutional reforms including financial systems, the judiciary and addressing corruption among extractive elites in Chinese local government.

He argues that China needs reforms to create the right incentives for Chinese businesses to move up value chains in the world economy.