This paper argues that the regional income gap of China is endogenously determined by its long-term economic development strategy. Development strategies can be broadly divided into two mutually exclusive groups: (i) the comparative advantage-defying (CAD) strategy, which attempts to encourage firms to deviate from the economy's existing comparative advantages in their entry into an industry or choice of technology; and (ii) the comparative advantage-following (CAF) strategy, which attempts to facilitate the firms' entry into an industry or choice of technology according to the economy's existing comparative advantages.Since the founding of the People's Republic of China, the government has pushed a CAD strategy, i.e., 'leap forward' strategy that emphasized the development of capitalintensive heavy industries. In most provinces, however, the priority industries under this strategy were inconsistent with the comparative advantage determined by the factor endowments in those provinces. Many enterprises in the priority industries were not viable in competitive markets and required interventions in the markets by the …/.