This article uses both cross-section and panel data approaches to staay regional growth in China Inter-regional income inequality increased (O divergence), the rich regions became richer but poor regionspoorer (βdivergence), over the data period 1978-95 This contradicts resultsfrom 0ther cross-region country studies shownby Sala-i-Martin [1996] and some earlier studies on China Only after controlling for regional effects, population growth, and investment in both physical and human capital do the data show significant β-convergence More interestingb, the degree of openness and transportation are two other important factors responsiblefor differences in regional growth. This finding has important implications for regional development policy.