At the end of the 1970s the per capita income ratio between the Soviet Union and China was 16 to 1. By now, the gap between Russia and China is closing rapidly. Although the collapse and dissolution of the Soviet Union contributed to this levelling of per capita incomes, domestic factors and improvements in China look more important: decollectivization of Chinese agriculture, the establishment of township village enterprises in China, economic openness and market-preserving federalism in China. In all these respects, even post-Soviet Russia continues to lag. Admittedly, Russia was faster than China in privatizing state owned enterprises but the preferential treatment of insiders and the weakness of the rule of law or functional substitutes for it neutralized this potential Russian advantage.