China and The Middle-Income Trap

Over the last 3 decades, the Chinese economy has grown at an average pace of 10% per year which is about three times the global average. Through this tremendous wave of growth, over 600 million Chinese people could lifted out of poverty. Following the classification of the World Bank for Middle Income Countries, this growth has transformed the People’s Republic of China from a low-income to a middle-income country. China’s GDP per Capita in 2015 constitutes USD 8’300 – the cut-off point to become a high-income country is set at USD 16’000. Nowadays, China finds itself facing hurdles which are typical for a middle-income country. Between 2011 and 2014, the economy grew with an average of 8% which is the lowest pace in over a quarter century. The factors that fostered the country’s rapid growth start to evaporate. Now the question is whether or not China’s economy can continue the growth of prosperity that the country has observed over the past 30 years and transform into a high-income country. Long-awaited structural and economic reforms, raising wages to boost the consumption and GDP per capita and the focus on improved entrepreneurship and innovation are considered as factors to overcome the middle-income trap. With this year’s project we want to create value for all participants by gaining a real insight of how China is facing the difficulties mentioned above. We would be happy to welcome you as an active contributor to this project and are looking forward to meet you in person.

Your Insight China Team 2017