Reflections On China’s Leap Over The Middle Income Trap

The concept of MIDDLE-INCOME TRAP was put forth by World Bank in 2006 and gained the attention of the academic community,which refers that middle-income countries are facing the loss of labor cost advantage,but their scientific and technological level can not catch up with the high-income countries.It means slow and stagnant economic development,causing these countries cannot enter the ranks of high-income countries.According to the World Bank’s standards,China’s per capitaGDP has reached 30015.05 yuan in 2010,equivalent to $4287.86,which means that China has entered the ranks ofhigh-income countries.But China’s economic growth rate has recently slowed down,and China’s demographic dividend has beendisappearing which is an important factor in stimulating economic development in a long term.So,whether China can overcome this obstacle successfully or not is of great significance to economic development and social stability.This article focuses on the disappearing of demographic dividendin order to analyze the risks of middle-income trap China is facing.First,it analyzes the growth path provided by demographic dividend in theory;Then,Through qualitative and quantitative analysis on China’s natural change on population,and changes in population structure,population dependency ratio andpopulation quality,it can be concluded that China’s population dividend will soon depletion.Relying solely on the demographic dividend of economic development is not sustainable,and scientific and technological progress is the key factor.Technological progress is the necessary guarantee for the transformation of productive forces,the optimization of economic structure and the promotion of social stability.Furtherly,this paper analyses the development of China’s science and technology.recognize the advantage and identify shortcomings,so that we can lay the foundation for technological advancement.This paper selects Japan and South Korea as the successful countries which haveovercomethe "middle income trap";And choses Brazil and Mexico as the typical countries cannot extricate themselves from "middle income trap" in a long-term.Through comparing the three major industrialstructure,technological progress and the unemployment rate of major economic indicators,it can be find thatthe situation in China is not optimistic.Then the paper from the macro perspective analyses the international reason for this dilemma,and analyzes the risk furtherly.The risk judgment includes the following aspects:firstly,rough estimate from the time dimension to the possibilities;secondly,we can analyze the danger that makes our country trap in middle-income trap form the disappears of demographic dividend that effect economy.The empirical analysis is based on the The New Economic Growth Theory.This paper selects the per capita GDP as a measure of economic growth indicators;selects the total fixed assets investment and urban and rural residents’ savings deposits at the end as a measure of capital investment;selects quantity of employment as a measure of labor input indicators;selects per capita years of schooling and the level of average education of the employees as a measure of human capital;selects the number of authorized patent applications as a measure of technological progress;in order to analyses the impact of the demographic dividend,this paper chooses the elderly dependency ratio as a measure of the demographic dividend.On the basis of the new economic growth theory,the factors that affect the economic growth model are put into the empirical analysis.The paper explores the role of various factors in economic growth and arrival at a conclusion that in the background of slowing demographic dividend,the key that China whether can cross the middle income trap or not is technological progress.The last part of the article based on the foregoing analysis concluded that physical capital is the greatest contribution to economic growth but has little room for improvement,the amount of labor has limited room for improvement on economic growth,also human capital accumulation is a long process,in the background of the disappearing of demographic dividend,so the rising elderly dependency ratio is not conducive to economic improvement;The key that whether China can cross the middle income trap or not is the technological progress,only the introduction of technology,technological innovation and technological innovation can give full play to technological progress in increasing labor productivity,changes in productivity,optimize the industrial organization and the promotion of social stability and the potential to achieve critical "factor-driven" to "innovation driven" successful transition.And technological progress is not separated from high-tech talent,so the prosperity of education and human capital cannot be ignored.