Financial Support, Economic Restructuring And Escaping The Middle Income Trap

During the economic development of China, middle-income trap is a serious problem that we have to face up to. Most of the reseaches about this issue both at home and abroad show that the old mode of economic development cannot maintain a certain rate of economic growth may be the basic reason of middle-income trap. The key to solve the problem is switching to a new economy development mode.Typical examples of middle-income trap as Latin American and Southeast Asia countries show that when a middle income country cannot form a new economic structure, it may also face a financial support failure which increase of risk in finance system even cause financial crisis. Then chaos and an economic downturn have followed this development in the wake of the financial crisis. According to the above analysis, middle-income trap can be the result of a combination of economy structure imbalance and finance factors. At present, China has the same problems as economy structure imbalance. This master’s thesis draw a conclusion through theoretical and empirical analysis that:the Chinese financial system should strengthen the multi-level capital market in order to support for industrial upgrading, at the same time, it should also develop consumer credits in a stable manner which will play an active part in restructuring investment and expanding consumption demand.A good coordination of the relationship between them has an important significance in the way of escaping the middle income trap of China.