This article discusses the source of China's impressive growth and attributes it not just to intensive capital investment, but also tremendous productivity gains. Many believe that China's growth has been due to investment, but research shows that the growth has also been due to more efficient uses of labor and capital.
Productivity was measured using "total factor productivity", which takes into account both labor and capital productivity. From 1990 to 2008, China's productivity grew ~4% annually, while OECD countries (US, Japan, etc) grew about 1%. The main reason for such improvement is China's rapid adoption of technology. Not only is China starting from a very low technological base, but it also strongly encourages foreign investment that brings new technology into the country.
China provides good contrast to the USSR, where despite heavy investment, the economy still collapsed because it did not result in productivity gains.
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