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Business/Finance See other Business/Finance Articles Title: China has what it takes to escape middle-income trap Want... China's massive population and economy will help it to escape the middle-income trap and become a high-income country, according to Li Xunlei, an expert at the Shanghai Finance Institute. In an op-ed piece in the Shanghai-based Economic Observer, Lee said China has similar characteristics to countries such as South Korea and Japan, which have escaped the middle-income trap. The middle-income trap is a phenomenon in which a rapidly growing economy stagnates at middle-income levels and fails to advance into the ranks of high-income countries. The World Bank classifies countries with a gross national income of US$12,616 and above as high-income countries, Li said, noting that China's GNI per capita stood at US$5,740 in 2012. The long working hours in China — 45 hours a week on average in 2012 — are evidence that the Chinese people are hard-working, a characteristic that is shaped by the lack of resources, namely farmlands, Li said. The same lack of resources also exists in Germany, Japan and South Korea, which have all become major manufacturing and exporting countries in the world, Li said. In China, the emphasis on education and Confucianism are also expected to help push the country to the next stage of economic development, Li said, adding that several East Asian economies such Japan, South Korea, Taiwan, Hong Kong and Singapore, which are all greatly influenced by Confucianism, and have entered the ranks of high-income countries. The Chinese economy was built on the flow of capital, goods, workers and more recently information, and the country is set to benefit from the massive size of its population and economy, Li said. China's huge population has resulted in a flow of laborers and, lately, skilled professionals, who are now concentrated in more developed areas such as Beijing, Shanghai and Guangdong, Li said. In terms of the flow of goods, China's advanced high speed railway and logistics services have helped the country become the world's largest exporter and the second-largest importer, as indicated by data for last year, Li said. China will also see economic dividends as result of an active financial market, which has the world's biggest M2 money supply and capital market turnover, and a rapidly growing information technology sector, according to Li. However, there are several factors pulling back the Chinese economy, including the lack of jobs and lagging public services outside the big cities, Li said. He also pointed to other factors such as the fact that credit is being offered mostly to inefficient state-owned enterprises, and government information remains lacking in transparency. Post Comment Private Reply Ignore Thread
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