For a large part of the last two millennia, China was the world's largest and most advanced economy. Then it missed the Industrial Revolution and stagnated. Only after opening to the outside world in 1979 was China's economic performance again impressive. At the turn of the 21st century, China faces daunting internal challenges compounded by the knowledge and information revolution. To overcome these challenges the Chinese government must take on a new role to quickly exploit the knowledge revolution--the role of architect of appropriate institutions and provider of incentives to promote and regulate a new socialist market economy based on knowledge. This book presents policy recommendations for China as it moves from a command, industrial, and agriculture-based economy to a knowledge-based economy. The book argues that China will have to build solid foundations for a knowledge-based economy by updating the economic incentive and institutional regime, upgrading education and learning, and building information infrastructure. China must also raise the technological level of the economy by diffusing new technologies actively throughout the economy, improving the research and development system, and exploiting global knowledge. (Contains an extensive number of boxes and tables, 19 figures, a box figure, and 4 Appendix tables. Also contains extensive references.) (BT)