The Transformation Of Government And Economic Growth Under The Challenge Of Middle-income Trap

As China becomes a middle-income countries and economic growth pressuresincrease，there are signs that the " middle-income trap" on China’s economic is loomingfrom the real economic contradictions. In existing studies, there is little systematicanalysis on this issue from the perspective of the government functions. Since thegovernment has a very special status in China’s economic development, it is difficult tograsp the crux of the problem and the essence of the "middle income trap" if we ignorethe Influencing factor of government. Therefore, we decide to analyze and discuss theissue of "middle income trap" from the perspective of the government. It will providesome new explanations and thought to understanding the cause of China’s economicgrowth difficulties and the interaction mechanism between government transformationand economic growth.Base on reviewing and analyzing the relevant literature, this article sorts out theinternal logic of the "middle income trap" theory and Illustrates the relationship betweengovernment restructuring and economic growth. Along this line of "transformation trap-welfare trap", this article has analyzed the reasons for the plight of government-ledeconomic growth from the perspective of the social costs, pointed out the potential risksfor the transformation of the government, build a theoretical model to explain the innerlogic of the government transition and economic growth. Finally, make a conclusion forthe full text, and put forward policy recommendations for the coordination ofgovernment transformation and economic growth.Through this research, following conclusions can be made: China’s rapid economicgrowth mechanism can be summarized in a growth model for the government under theauspices of the "low product cost-high social cost". Due to the lag of transformation ofthe government, the pattern of growth has accumulated huge social costs, which makesthe Chinese economy faces a "growth ceiling". However, the transformation of thegovernment is not easy, the process of transformation is subject to the constraints of theconditions of economic development, or more directly subject to the constraints ofgovernment revenue, there can be excessive beyond the current level of economicdevelopment "social welfare" ability, otherwise they will the risk of trapped in a"welfare trap". At present, China faces the potential threat of the "welfare trap". Doubleunder the yoke of excessive "growth ceiling" formed by the high social costs and social welfare spending will form a "welfare trap", the Chinese government in transitionfacing an awkward dilemma. Therefore, the challenge of the "middle income trap", theChinese government in the transition process need to change the GDP growth ’mode;weakening of government control, to change the monopoly position of the governmentdepartments of economic resources; government in the transition process to bereasonable limit the government’s social welfare responsibilities, to avoid repeating themistakes of Latin America and some East Asian countries.