Sylvie Démurger: Through the example of the development strategy implemented by the Chinese government, Lu and Xiang discuss a broad development question—how to achieve a balanced inter-regional development while maintaining economic efficiency. As rightly recalled by the authors, increasing development gaps observed in China between coastal and inland areas suggest a degree of irreconcilability between economic efficiency and inter-regional balance. They argue that the main driver of the conflict in China is the persistence of strong institutional barriers that impede full labor mobility.The authors make an interesting point in highlighting two main policy options to solve the strategic challenge on how to reconcile regional balancing and economic efficiency. The first option, which was favored by the Chinese government in the 2000s, is to increase money transfers to less-developed regions. The authors argue that though such transfers are useful in balancing growth, they may lead to a distorted, inefficient allocation of resources across and within regions, notably if resources are artificially allocated to regions where their productivity is low. They point out three main problems in the current development of China's inland regions, which are a heavy reliance on investment, scattered industrial development zones, and a constrained choice of industry. A second policy option to achieve both objectives of regional balancing and economic efficiency, which is advocated by the authors, would be to let people move. The authors rightly mention, though without developing the argument further, potential agglomeration effects that could help reduce gaps between coastal and inland provinces and promote economic efficiency.Using data collected from manufacturing enterprises in 1999–2007, Lu and Xiang illustrate their point by analyzing the total factor productivity (TFP) growth as a direct measure of organizational efficiency, which can be further influenced by technological and institutional factors. They highlight a reduction in enterprises’ efficiency after 2003, characterized by a decline in the overall TFP growth rate and a deterioration of the allocative efficiency, across regions as well as between state-owned enterprises and non–state-owned enterprises. The analysis provides interesting results, although it misses a few points that could have been documented to strengthen the argument. First, does the year 2003 really represent a break in the trend or does it simply reflect short-term cycles? Evidence provided in the various figures does not answer the question, notably because the time scale is limited to less than ten years. Second, the impact of the regional balance policies implemented in the 2000s on the deterioration of resource allocation is postulated rather than effectively demonstrated. This is clearly a difficult exercise, but I would have liked at least to see further discussion on the postulated causal impact of institutional constraints on the declining economic efficiency.The paper emphasizes the “moving people” approach against the “moving money” approach as a solution to reduce inter-regional imbalances and preserving economic efficiency, and in this perspective, it advocates a deep reform of the household registration (hukou) system and of the land system. Regarding the hukou reform, there is no doubt that the heavy institutional constraint that this system puts on people and on the overall economy needs to be relaxed. The success of any hukou “reform”, however, will also strongly depend on the country's capacity to create coordination among various administrative (decentralized) units and to establish supportive institutions. Among others, the social security coverage needs to be enlarged, and making benefits portable requires national-level coordination of (highly decentralized) programs. As far as education is concerned, another hot issue is to make the integration of migrant children into the urban public school system possible, which calls for another deep reform in education (local) funding.