China can avoid middle-income trap: World Bank chief economist
by Xinhua Writer Liu Lina
China, the second largest economy in the world, can avoid the so-called middle-income trap if it implements appropriate policies, a World Bank economist said.
"The middle-income trap is not inevitable," Justin Yifu Lin, chief economist and senior vice president of the World Bank, told Xinhua in an interview. "To a large extent, it is subject to policy and development pattern."
The term "middle-income trap" refers to countries stagnating and not growing to advanced country level. Their per capita income ranges from 2,000 to 6,000 U.S. dollars, unable to make breakthroughs.
Lin said that the Chinese government has accumulated much experience in macro management since the reform and opening up over thirty years ago, and per capita GDP reached about 4,400 U.S. dollars in 2010.
"In dealing with the challenges, China needs to focus on three aspects of policy response," Lin said.
Firstly, it needs to continue to promote technology innovation, industry upgrading and competitiveness. "The purpose of updating technology is to increase competitiveness," he said.
Secondly, it needs to solve the problem of income distribution. Acknowledging the significant improvement in living standards of the Chinese people, Lin quoted the old Chinese saying "Inequality rather than want is the cause of trouble." He said that this means that the income distribution challenge should not be ignored; otherwise, it will cause social tensions.
"Without a stable social and political environment, proper economic development will not be achieved," Lin said.
Thirdly, how to properly handle the relationship between economic growth and the environment is another major challenge.
"The increasing pressure on resources and the environment in the process of fast growth should also be addressed properly," Lin noted.
He cited some successful development experiences in Asia, where some low-income countries became middl! e-income countries and were then able to become high-income nations.
Lin said that as long as China continues on the path it has followed over the past three decades, and properly addresses the three major challenges, China "can avoid the middle-income trap."
He also said that China should keep a close eye on spiking inflationary pressure, an overheating economy and possible asset bubbles in the real estate sector. "Be prepared for danger in times of safety" should be the policy motto, he said.
"The Chinese economy will continue to keep fast and stable growth in the next two decades or so," Lin predicted.
Source:Xinhua
Weekly review May 20 World Economic Forum China office marks fifth anniversary May 18 China, Pakistan joined in bonds of brotherhood May 20 'Central axis' of Beijing applies for world cultural heritage May 20 In pictures: Int'l 'Financial Security' symposium opens in Beijing May 21 The week in pictures May 16 Beijing aims for massive influx of overseas talent in 2011 May 16 Singapore election coverage shows Western arrogance May 16 Chinese naval helicopter conducts target practice in Gulf of Aden May 17 Strategies for harmony between militaries of China, US May 17 Pakistani Prime Minister hails China as true friend
Editor China, the second largest economy in the world, can avoid the so-called middle-income trap if it implements appropriate policies, a World Bank economist said.
"The middle-income trap is not inevitable," Justin Yifu Lin, chief economist and senior vice president of the World Bank, told Xinhua in an interview. "To a large extent, it is subject to policy and development pattern."
The term "middle-income trap" refers to countries stagnating and not growing to advanced country level. Their per capita income ranges from 2,000 to 6,000 U.S. dollars, unable to make breakthroughs.
Lin said that the Chinese government has accumulated much experience in macro management since the reform and opening up over thirty years ago, and per capita GDP reached about 4,400 U.S. dollars in 2010.
"In dealing with the challenges, China needs to focus on three aspects of policy response," Lin said.
Firstly, it needs to continue to promote technology innovation, industry upgrading and competitiveness. "The purpose of updating technology is to increase competitiveness," he said.
Secondly, it needs to solve the problem of income distribution. Acknowledging the significant improvement in living standards of the Chinese people, Lin quoted the old Chinese saying "Inequality rather than want is the cause of trouble." He said that this means that the income distribution challenge should not be ignored; otherwise, it will cause social tensions.
"Without a stable social and political environment, proper economic development will not be achieved," Lin said.
Thirdly, how to properly handle the relationship between economic growth and the environment is another major challenge.
"The increasing pressure on resources and the environment in the process of fast growth should also be addressed properly," Lin noted.
He cited some successful development experiences in Asia, where some low-income countries became middl! e-income countries and were then able to become high-income nations.
Lin said that as long as China continues on the path it has followed over the past three decades, and properly addresses the three major challenges, China "can avoid the middle-income trap."
He also said that China should keep a close eye on spiking inflationary pressure, an overheating economy and possible asset bubbles in the real estate sector. "Be prepared for danger in times of safety" should be the policy motto, he said.
"The Chinese economy will continue to keep fast and stable growth in the next two decades or so," Lin predicted.
Source:Xinhua
Weekly review May 20 World Economic Forum China office marks fifth anniversary May 18 China, Pakistan joined in bonds of brotherhood May 20 'Central axis' of Beijing applies for world cultural heritage May 20 In pictures: Int'l 'Financial Security' symposium opens in Beijing May 21 The week in pictures May 16 Beijing aims for massive influx of overseas talent in 2011 May 16 Singapore election coverage shows Western arrogance May 16 Chinese naval helicopter conducts target practice in Gulf of Aden May 17 Strategies for harmony between militaries of China, US May 17 Pakistani Prime Minister hails China as true friend 
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