Theory and strategy of China overcoming the middle-income trap

YAO Shujie1,2,3

(1.School of Economics and Business Administration, Chongqing University)
(2.South China Agricultural University)
(3.University of Nottingham Ningbo China)

【Abstract】Since it initiated the reform and opening up drive in the late 1970s, China has experienced nearly forty years of unbroken high economic growth. It has been transformed from a poor and backward economy into a prosperous and dynamic industrialized country, constituting a great miracle in the world economic development history. However, when its per capita income reaches the middle-income level, how to overcome the so-called middle-income trap has become an important theoretical and practical challenge for China. To handle the challenge, China needs to learn from the experiences of other countries and also exploit its unique advantages in natural resources, political system, culture and history, especially the own economic strength and state capacities that it has accumulated over the last four decades of economic reform and opening up. In the 19th National Congress of the Communist Party of China (CPC), Xi Jinping, General Secretary of the CPC Central Committee, did not even mention the challenge of the middle-income trap; instead, he suggested that after successfully building an all-round well-off society in2020, China would spend 30 years to pursue a two-stage development (each stage taking 15years) in an attempt to achieve its modernization in all aspects by 2050. In the new era, China will not only try to overcome the middle-income trap but also maintain a long period of stable and healthy social and economic development to realize the Chinese dream of national rejuvenation. This article reviews the development history of the Chinese economy in the past forty years and discusses the challenges and constraints that China faces today. It then provides policy suggestions for China to overcome the middle-income trap and become a high-income economy.

【Keywords】 economic growth; regional gap; infrastructure; international trade and investment; reform of financial system;

【DOI】

【Funds】 National Natural Science Foundation (71673033) Project of Humanities and Social Sciences of Ministry of Education (16YJA790058)

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This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 01, Pages 86-107+6

January 2018

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Article Outline

Abstract

  • 1 Achievements and experiences of China’s reform and opening up over the past 40 years
  • 2 New challenges for China in the new era
  • 3 Theoretical and strategic measures to break the curse of the middle-income trap curse
  • 4 Discussions and policy suggestions
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