China evinces confidence to escape middle-income trap

The middle-income trap, a term coined by economists, has penetrated into every aspect of policymaking concerning world economic growth, and is frequently discussed when it comes to the developing world.

Since China's per capita GDP topped 3,000 U.S. dollars in 2008, there have been continuous debates internationally over the possibility of the country's slip into the trap like many other developing nations.

On the issue, recently the new Chinese leadership gave a firm answer.

"China will not fall into the middle-income trap," President Xi Jinping resolutely declared at a meeting with members of the 21st Century Council last month.

Such confidence is well-founded on a host of facts and evidences.

Simply put, that is because "China is unique", as some global observers have already pointed out.

ENDOGENOUS GROWTH POTENTIAL

At the macroeconomic level, the biggest endogenous factor spurring China's growth derives from the necessity to realize its new round of modernization. Huge demand will be unleashed amid China's acceleration on the new path toward industrialization, informationization, urbanization and agricultural modernization. The processes will continuously fuel fast economic development.

The endogenous element to maintaining good economic momentum at the micro level entails increasing people's income. In this connection, the Chinese people's aspiration for better lives is acting as an engine for the growing economy.

Economists created the concept of "middle-income trap" based on international experience, which, however, does not necessarily mean the inevitable. For example, U.S. think-tank Atlantic Council was stunned by China's extraordinary progress from a country with an annual GDP of 200 billion dollars in 1980 to more than 8 trillion in 2012, during which 600 million people were lifted out of poverty.

New historical situations beget new development opportunities. A string of major economic policies were rolled out shortly after the Third Plenary Session of the 18th Communist Party of China Central Committee, including the latest decision to reopen the initial public offerings (IPO) on the Chinese stock market and the issuance of 4G mobile phone network licenses.

INSTITUTIONAL GUARANTEE

No doubt, the middle-income trap is a worldwide dilemma. From Latin America to Southeast Asia, many countries have suffered from frequent economic fluctuations and long-term stagnation, which are often combined with political tensions, off-track concepts, failed reforms, inefficient decision making and complacency.

With a clear assessment of the risks and dangers, China adheres to its own path and effectively tackle the challenges.

According to International Monetary Fund statistics, only six out of a total of 185 economies have sustained an economic growth rate of 5 percent plus over four consecutive decades and China is one of them.

And if its mid-term economic target is successfully met by 2020, such a colossal economic entity will once again create economic history.

Lin Yifu, former chief economist at the World Bank, estimated China's per capita GDP will double to 12,000 dollars by 2020. The next seven years will pass in the twinkling of an eye, but there is no doubt China's economy can accomplish a quantum leap in fundamental transitions in such a short period.

These rosy prospects stem from the stability of the Chinese approach and the uniqueness of its system. As stressed by President Xi, China is taking the right path, which was discovered by the Chinese people after years of the twists and turns.

OPEN MIND, EAGERNESS TO LEARN

As U.S. scholar and columnist Fareed Zakaria wrote in "China's Coming Challenges" after his latest visit to China, one of the reasons China has succeeded so far is its willingness to learn from others.

A Chinese saying has it that being eager to learn and practise is the key to progress, and this has proved to be a golden rule in all times. For China, the frequent occurrence of the "middle-income trap" only serves as a reminder to guard against carelessness and relaxation.

Another secret to China staying on the right track is its inclusiveness. President Xi has emphasized that, the further China develops, the wider China will open its door to the outside. China's reform and opening up effort will never come to an end or be slackened.

A rising China with a more stable and sustainable economy will undeniably offer a broader market for other countries and bring about more positive spillovers for the world economy as a whole.

Just as it has defied the many predictions of its collapse in the past decade, China will break the spell of a so-called predestined fate in the foreseeable future and the middle-income trap will simply fail to materialize.