Let Reform Benefit All, bypass "Middle Income Trap"

Chinese Premier Li Keqiang stressed recently that China would strive to let development and reform benefit all people, voicing the determination of the government to narrow the gap of wealth, establish a more fair and reasonable system of revenue distribution, and achieve common prosperity.

This is also key to China being able to stride over the so-called "middle income trap."

As the annual sessions of China's top legislature and top political advisory body continue, Xinhua reporters raised the question of the "middle income trap" to experts, scholars, businessmen and ordinary people worldwide.

DIALOGUE 1

Xinhua: According to the levels set by the World Bank, China has joined the rank of the middle developed countries. Some analysts believe that China will inevitably face the challenge of the "middle income trap." What do you think of it?

Carl Dahlman, research head of the Development Center of the Organization of Economic Cooperation and Development, told Xinhua in Paris that he personally believes China's economic growth has outpaced other countries over the past 35 years, staying at a high of nearly 8 percent, although the pace is currently slowing.

Moreover, the Chinese government clearly knows what it needs to do on the path of reform, Dahlman said.

Tsugami Toshiya, former economic counselor at the Japanese embassy in China, said China has already recognized its "middle income trap" and the decision made at the third plenary session of the Communist Party of China Central Committee in November last year was groundbreaking.

Whether China can stride over the trap depends on the implementation of these decisions, Toshiya said.

Fernando Augusto Adeodato Veloso, investigator of Brazilian School of Economics and Finance of Getulio Vargas Foundation, said currently China is a bit like Brazil in the 1950s-1980s.

Veloso said both countries had developed rapidly in the start-up phase as they turned to more lucrative manufacturing and service industries from agriculture of lower productivity.

However, after per capita GDP reached the middle income level, the growth slowed down, he said, adding that the countries need to change the development model, such as focusing more on domestic economy rather than exports, increasing innovation investments, strengthening patent protection and enhancing the living standards of people.

DIALOGUE 2

Xinhua: What are the potential methods China could employ to avoid the trap? How can China learn from the experience of other countries?

Cho Young Nam, a professor on China studies from Seoul National University in South Korea, said China should address the income distribution problem, otherwise it would aggravate social contradictions.

It requires the government to rule the country by law, implement judicial reform, and expand citizen participation, the professor said.

Cho said Singapore, as a city-state, could implement central policies as quickly as possible, and thus it could stride over the "middle income trap" quickly.

However, reform in China needs more public support from citizens due to the complicated relations between central and local governments, Cho added.

Han Jae Jin, a researcher on economic studies in Seoul, South Korea, said his country had restructured its economy thoroughly in order to stride over the trap.

The government of South Korea had shut down less competitive state-owned enterprises, supported more competitive emerging and private companies, and increased education budgets, Han said.

The researcher suggested China should reduce the burden of middle and small businesses, cut away unhealthy parts of large enterprises and cultivate its own talents and brands.

Matias Carugati, chief economist of Management & Fit Consulting Company in Argentina, said it is right that the Chinese government focuses on building a more reasonable revenue distribution system in its comprehensive reform.

DIALOGUE 3

Xinhua: What do you and the public think of China's striding over the "middle income trap"?

German Conrado Avellaneda, president of the Food Arts Company in Argentina, exported marine food to China and imported electronic products.

He said he did not feel worried about Beijing's "middle income trap" as China has more and more middle income people with growing demand for Argentine seafood.

China's upgrade of electronic industry and adjustment of economic structure would further reduce the production costs of high-tech electronic products, Avellaneda said, adding that his company's cost of imports has dropped significantly in the past 15 years.

Douglas Guardia, a vendor in Rio de Janeiro, Brazil, said he knew little about the "middle income trap," but believed advancing the living standards of its people is a commitment that every government should fulfil.

He said China has developed rapidly and hoped the Chinese people could enjoy a happy life.

Source: Xinhua