With greater efforts, there's still time to avoid middle-income trap

CHINA MUST AVOID falling into the middle-income trap, Premier Li Keqiang cautioned when delivering this year's Government Work Report to the National People's Congress in Beijing earlier this month. Beijing Youth Daily said on Wednesday:

The so-called middle-income trap has haunted some Asian and Latin American economies, which after managing to get rid of poverty, have failed to complete the necessary economic transition to realize the next stage of development. This has resulted in economic stagnation, widening income gaps, severe corruption, high unemployment and financial fragility.

Premiere Li's warning is timely as China's GDP per capita reached $8,000 last year, which is just over the middle income level. More importantly, its remarkable economic rise in the past three decades or so has been fueled by high investments and the consumption of natural resources, as well as labor-intensive and export-oriented development, which is not sustainable.