Abstract: In this paper we construct a number of quality-adjusted price indexes for perso nal computers in the China marketplace over the period 1995—2005. Linear and no nlinear hedonic models are estimated using data from personal computers. The res ults indicate that nominal quality-adjusted prices declined at an average annua l rate of 35%. We conclude that taking quality changes into account has an enorm ous impact on the time pattern of price indexes for PC-s. 