Managing the Middle-Income Transition

Managing the Middle-Income Transition

Challenges Facing the People’s Republic of China

Edited by Juhzon Zhuang, Paul Vandenberg and Yiping Huang

The growth model of the People’s Republic of China has been based on high investments, exports, low-cost advantage, and government interventions. This model has successfully transformed the country from a low-income to an upper middle-income economy. However, the model has generated contradictions that could undermine future growth. Making the transition to high income requires greater reliance on efficiency and productivity improvement, innovation, and market competition. This book examines the challenges faced by the People’s Republic of China in sustaining robust growth, and policy options for making a successful transition to a high-income economy to avoid getting caught in the middle-income trap.

Chapter 6: The global dimension of rebalancing and sustaining growth

Ligang Song

Subjects: asian studies, asian development, asian economics, asian politics and policy, asian social policy, development studies, asian development, development economics, economics and finance, asian economics, development economics, politics and public policy, asian politics, social policy and sociology, social policy in emerging countries


The People’s Republic of China (PRC) faces some extremely demanding challenges in addressing its economic imbalances, sustaining growth, and becoming a high-income country. Now the world’s second largest economy, the PRC is heavily integrated with other economies in trade, finance, resource procurement, and environmental concerns—and these ties significantly influence its policy options and economic strategies. While managing global imbalances will be necessary for achieving sustained, equitable, and balanced growth, this alone will not be sufficient for attaining this pattern of growth or for avoiding a middle-income trap. Instead, the country should aim to achieve these goals by deepening domestic reform and becoming a driver of global economic integration by strengthening an open, rules-based multilateral economic system. But more effort is needed for attaining these goals.

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