The study at hand deals with economic growth and income distribution in the PR of China since 1978. Moreover, we evaluate the sustainability of China's economic rise. The study begins with the most important historical events in the PR of China as well as basics of the Chinese economy. The second part of the study deals with economic growth (which was exceptional) occurring in China over the last 30 years. The main sources of growth have been amongst others: technological advance via imitation, an ?unlimited? labour supply, human capital improvement, and institutional reforms. The model used in this section, shows that foreign direct investment, and the technologies and ?know-how? imported with them are, one important reason why China's economy was in a catch-up process during the last three decades. Another major factor which might explain China?s exceptional growth is the structural change of China?s labour force. Finally, we also deal with empirical evidence of China?s economic growth. In the third part of the study, we deal with income distribution. Interprovincial as well as rural-urban income distribution in China got worse during the reform period. The wage share has declined substantially over the last three decades. However, historically unique, hundreds of millions Chinese were freed from absolute poverty since 1978. Again, foreign direct investment is a major help in understanding the development of income distribution in China's reform period. With concern to the sustainability of China's development, there are some reasons which point to China's growth path being sustainable in the future as well as some reasons which signal the opposite. There are good reasons for a continued economic rise of China: the still existing technology gap, its relatively institutional backwardness and the structure of the labour force. On the other hand, there are demographic, environmental and political concerns which may be serious restrictions for China's development.