Escaping Middle-income Trap And Path Of Industry Upgrading Of China

In recent years,"middle-income trap" was concerned strongly by our society. In2010, China’s per capita GDP is more than4000U.S. dollars, which indicates that China has officially entered the ranks of "middle income" countries. Into2011, China has ushered in the first year of the "12th Five-Year Plan". Now, with the global financial crisis and risks at home and abroad, how to to promote the industry upgrading and enhance industrial competitiveness, and thus solve the problems of uncoordinated, unbalanced and non-the continuing of China’s economic growth in recent years is the core issue of China’s current economic development and the key to sustained economic growth. In fact, the "12th Five-Year Plan" continues to emphasize the transformation of economic development, which actually highlights our government’s policy to respond to the" middle income trap "determination.From the trend of economic growth in recent years, although China’s economy maintained a growth rate of over8%, the problems that hidden in the growth of industrialization in the early were gradually revealed."Features of "middle-income trap", such as "labor Shortage", the too large income gap, insufficient domestic demand, and the difficulty of industrial upgrading have been showing up.China has actually begun to face the "middle-income trap ". In the past two years, research on "middle-income trap" has been gradually increasing, but these studies did not analyze the less dominant factor changes under the micro-competitive advantage and the industrial upgrading power. Also, analysis on the "middle-income trap" caused by industrial upgrading interruption is requiring an further attention in future research.The domestic and international research on middle-income trap "stays in the stage of looking for external causes and is less of mechanisms.Therefore, research on practice or theory has an also an important significance.Related studies have shown that the "middle-income trap" is closely related to a country’s industrial upgrading path. The choice of a country’s industrial upgrading path should solve the direction of industrial upgrading, the amplitude and the interruption risk aversion, but the traditional theory of comparative advantage can not give an exact answer. In recent years, the theory of comparative advantage of evolutionary studied the process of industrial upgrading and thought that the upgrade path of industry was decided by the country’s evolution path. Also, industrial upgrading interrupted risk exists in the evolution of comparative advantage, and industrial upgrading interruption may lead to economic growth, stagnation and even recession. A country’s stage of the "middle income" will face the rising cost of factors of production and the increasingly difficulty of innovation. With the evolution of comparative advantage and other reasons, the comparative advantage of enterprises upgrading difficulties will weaken the economy prone to industrial upgrading interrupted. At present, China is at a critical stage of industrial upgrading, and may be interrupted by more and more risk. How to avoid this risk is the major issues of our country must be resolved in the future.In fact, the driving force and foundation of a country’s industrial upgrading is enterprises. The problem of industrial upgrading can not be separated from the upgrading of the enterprise enterprises’ power to maintain and create their competitive advantage and more profits. This article selected the perspective of evolution of comparative advantage and tried to establish a model of industrial upgrading based on the comparative advantage evolution. Meanwhile, based on "innovation" we studied the bifurcation of industrial upgrading and explained the "middle income trap" to explore problems of China’s industrial upgrade path selection.On the basis of theory review, this article firstly classifies the countries that faced with the problem of "middle-income trap". Based on the competitiveness of enterprises and its interaction with industrial upgrading, we analyzed whether interruption of industrial upgrading will lead to "middle-income trap". Then, through the model, we explained the mechanism of "middle-income trap" from the perspective of industrial upgrading, and analyzed the reasons why "middle-income" stage is easy to fall into the trap. For the last, we analyzed China’s risks of "middle-income trap"and explored our country’s policy to avoid the "middle income trap" ideas.The result shows that high cost is the fundamental cause for difficulties that industrial upgrading which leads to industrial upgrading suspension and sluggish economy growth in the middle income stage. At the same time, the necessary condition of industrial upgrading is easy to be satisfied in the middle income stage, which shortens the jump critical value needed to realize the upgrading, and increases the possibility of suspending as well as the growth sluggish and be trapped. In addition, industrial upgrading bifurcation can explain part of the economy by leaps and bounds."Innovation" after the economy going into a "middle income" can lead to industrial upgrading and a further bifurcation. Activities such as "innovation" can jump an optimal distance more than a single "imitation" and the likelihood of success will be greater, which provides a theoretical basis for a country to select the correct strategy of industrial upgrading to avoid the "middle-income trap".The innovations of this article are as follows:Firstly, a systematic explanation of the "middle-income trap" is analyzed by using of the theory of competitive advantage and the industrial upgrading. Secondly, we established a model of industrial upgrading based on the comparative advantage evolution and explained the mechanisms of the "middle-income trap". Based on "innovation" we studied the bifurcation of industrial upgrading and explained the "middle income trap ".Thirdly, we investigated the risk of the path of China’s industrial upgrading and interruption of comparative advantage. Then, we explored the policy of our country to avoid the "middle income trap" and investigated the mechanism of how enterprises promote the industrial upgrading, which is rarely involved in the previous study.