Zheng Yongnian: How can China escape the ＂medium income trap＂

< /p" China needs to learn how developed countries create wealth through enterprises.(Reuters)

After the development of an economy developed into the middle income stage (about 3,000 US dollars per capita domestic product), two results may occur.First, achieve sustainable development and gradually become developed economies; second, problems such as the disparity between the rich and the poor, the deterioration of the environment, and even the social turmoil have caused economic development.

Generally speaking, if it is the latter result, people call this economy falling into a middle income trap.It is not easy to avoid the middle income trap.Since World War II, few middle -income economies have successfully become high -income countries. Most countries have often fallen into a stagnation period of economic growth.National competition.

Most of the countries and regions that have successfully crossed the medium -income traps in the world are mostly in the Confucian cultural circle of East Asia. Except for Israel in the Middle East, Japan's Japan and the Si Long (South Korea, Singapore, Hong Kong and Taiwan).However, in terms of relatively large -scale economies, only Japan and South Korea have realized the conversion from low -income economies to high -income economies.

The per capita domestic GDP was close to 3,000 US dollars in 1972 and exceeded $ 10,000 by 1984.South Korea exceeded $ 3,000 in 1987, reached $ 11,469 in 1995, and reached $ 28,101 in 2014, entering the ranks of developed countries.From a middle -income country to high -income countries, Japan spent about 12 years, and South Korea took eight years.

These economies can be said to be an exception, because most people see are economies that fall into middle income traps.In Southeast Asia, the GDP per capita per capita in the Philippines in 1980 was US $ 684.6. In 2014, it was still only 2865 US dollars. Considering the inflation factor, the per capita income basically did not change much.In 2014, it only reached $ 10,804.

In the Latin American region, Argentina per capita GDP per capita in 1964 exceeded $ 1,000. In the late 1990s, it rose to more than 8,000 US dollars, but in 2002 fell to more than 2,000 US dollars, and then rose to 10,000 in 2014 in 2014$ 2873.In 1973, Mexico's per capita GDP had reached 1,000 US dollars. At that time, it belonged to a medium -income country, while the per capita GDP per capita was only 10,718 US dollars. After 41 years, it still belonged to the middle and the country.There are many similar countries in Latin America. Although after decades of hard work, it has not been able to exceed the threshold of developed countries with $ 15,000 after several years.

China's opposite views on the middle income trap

It is generally believed that there are many factors that promote these economies to fall into the middle income trap, including the timing of missing development model conversion, no overcome of technological innovation bottlenecks, insufficient attention to development fairness, deviation of government macroeconomic policies in government, and serious lag in institutional changes.

In the past, China had a fierce discussion on whether it would fall into the middle income trap, but there were two extremes of extreme opposite views.Optimisticists believe that China does not have the risk of medium -income traps, and even believes that this trap has been evaded; and pessimism believes that China not only has the risk of falling into this trap, but also has entered this trap in many ways.

The discussion is not as fierce as a few years ago, but this problem still exists objectively.Today, when the changes in the internal and external economic environment of China or even deteriorating, this issue needs to be faced and discussed.

Although the per capita income of China is close to $ 10,000, it is much lower than the per capita income of Taiwan in the last four small dragon economies in Asia.Especially for countries like China, not only are there huge differences in development in various places, but income distribution is huge among various social groups. Even if the per capita national income surpasses the medium -income traps here, many regions and social groups may still fall into caughtMiddle income trap.

If so, in terms of total amount, escape this trap, and many aspects of Chinese society will still reflect the social phenomenon of middle -income traps.Therefore, China needs to pursue not only the per capita income, but also the pursuit of relatively fair economic growth.

However, so far, the discussion in all aspects of China has great defects.First, the focus of the discussion lies in the government, not an enterprise.In other words, excessive emphasis on the country's macro policies, especially the role of industrial policies, and ignore or even ignore the role of the enterprise.It is true that industrial policies can promote the transformation or upgrade of enterprises, but the country's industrial policy needs to combine the actual needs of the enterprise.

The so -called effective supply is the supply that the enterprise needs, not the supply or planned supply by the government.Government's wishful supply or forced enterprises to accept the government's supply will have a fatal impact on enterprises.Regardless of anywhere, the main body of the economy is enterprises (including state -owned enterprises), not government.Furthermore, the existing analysis of the existing emphasis on national macro policies is too macro, and it is difficult to see what political economist Albert Hirschman calls the correlation (Linkage), that is, how to introduce from a factorThe emergence of another factor.

In other words, in addition to policy rent -seeking, it is difficult to see that the country's macroeconomic policy is conducive to enterprises that are conducive to evasion of micro -behavioral traps.From this perspective, people need to surpass the government and explore the role of enterprises in the process of assisting countries to escape the middle income trap.Just looking at government behavior and not corporate behavior, not only can't escape this trap, but it will contribute to entering this trap faster, no matter what kind of goodwill the government's original intention is.

Second, over -emphasizing those economies that have escaped the middle income trap or fell into the middle income trap, and ignore the developed western countries.It is important to study how these economies to escape or enter the middle income trap, but the stability of the economic development level of developed countries needs to be learned more.

Since World War II, most developed countries have gone through different economic crises, such as the energy crisis in the 1970s and the global financial crisis from 2007 to 2008.In recent years, most developed countries have also experienced political crisis with populism.However, the level of economic development of developed countries is stable, and it is not as big as developing countries.

Examples of developing countries such as Indonesia.In the Asian financial crisis in 1997, the political revolution occurred in Indonesia, and the construction achievements in the past decades have disappeared overnight.Examples of developed countries such as Japan.Japan has been laughed at since the real estate bubble was broken, such as 20 years lost for ten years.But the problem is that the development level of Japan is still the same, and the social and economic operations are carried out as usual.That is to say, in terms of per capita income, developed countries have indeed risen, but they have not dropped much.This is also in sharp contrast to the development of economies.It should be said that how to maintain the development level of developed countries is of more important significance for how China escapes the middle income trap.

Middle income trap is the issue of wealth creation and distribution

In the final analysis, the problem of middle -income traps is nothing more than two levels of wealth, including the creation and distribution of wealth.Developed countries are often typical capitalist countries, and the main body of wealth creation is enterprises, not government.The reason why developed countries can maintain high economic development is mainly the role of enterprises.Number in the pastAmong the ten years of globalization, companies in developed countries have created a huge amount of wealth, which plays a key role in maintaining the development of the society where the enterprise is located.

In other words, at least in terms of wealth creation, there are no serious problems in the economic and corporate systems of developed countries.The problem of developed countries is the political system, that is, there are huge problems in distribution.The huge amount of wealth created by the enterprise stays in the hands of a few people, and the government cannot effectively allocate the newly created wealth to achieve social fairness.

Today, in China, although facing the problem of wealth creation and distribution at the same time, the main problem is still the creation of wealth, not allocation.The Chinese government has strong mobilization capabilities to distribute wealth, but does not have the same powerful capabilities to create wealth creation.The main body of wealth creation is still enterprises.Therefore, China needs to learn how developed countries create wealth through enterprises.

How does developed countries maintain the advancement of economy?First of all, developed countries have maintained technical level.To this day, most core technologies are still in the hands of developed countries.In the era of globalization, technology spread from Western to developing countries, but core technology has not flowed out.In addition to protecting the core technologies in the name of national security in the name of national security, the main reason is institutional, that is, maintaining the competitiveness of the enterprise.

This includes antitrust law.Anti -monopoly can maintain the openness of an economy, not only the opening of the outside world, but also the internal openness, that is, the development of new types of enterprises; otherwise, it is difficult to avoid the situation of politics and business.Become a rent -seeking economy, not only the enterprise finds rent from the government, but also government or government officials can also find rent from the enterprise.

The second is the relationship between the government and the workers (workers), which is intended to maintain the balance between capital and labor, or the balance between the big cakes and the big cakes.Whether it is the government of a democratic country or the government of a socialist country, it will tend to divide the big cakes, because dividing the big cakes will satisfy the people to show the government's legitimacy.The common people (workers) are also inclined to benefit from capital (enjoy the wealth they deserve).

That is to say, the government's intentions and the people's intentions are consistent.Of course, dividing big cakes is required, but it must be balanced between making large cakes and big pieces, otherwise capital has no motivation to make a difference.In this regard, although the government of developed countries is facing the pressure of welfare society, the government has still achieved a balance between the two.Otherwise, it is difficult to explain the phenomenon that Western high -quality capital and technology have not lost.

What do you avoid the middle income trap

More importantly, developed countries create good regional conditions for capital and become capital embedded in the region.It is precisely because capital needs to flow or stop flowing. It also needs to create good regional conditions for capital.Although contemporary Western issues are heavy, there are no high -end capital outflows.Wealth distribution is severe, but most of the affected are the underlying society, and it does not affect high -level society, that is, the actual ruler of society.The middle and upper middle class still cooperate with capital to enjoy the benefits of capital.These groups are also the class of capital and technology.

Regional conditions include the formation of a complete industrial chain, education and training system, and the provision of technical labor.Capital can flow, but these are unable to move and inseparable.In fact, high -tech and high -quality capital are inseparable from these, most of which are established by the capital itself (such as university and technical training schools).Therefore, under the globalization, all the non -core economic and technological activities have been lost in the West.This is why the West has maintained a leading lead, or it is not so fast.

During the election, developed countries generally choose political parties with economic management experience to take power.A populist party can go to the stage, but in the absence of economic management experience and ability, it cannot be effectively governed and will soon step down.

Many other developed economies also escape the middle income traps around enterprises.This is particularly manifested in the past achievements of the four dragons in Japan and Asia, and also on issues facing these economies today.The problems occurred in Taiwan and Hong Kong are both the government and the problems of enterprises; the success of Japan, South Korea and Singapore is attributed to the effective cooperation between the government and enterprises.

The dilemma faced by many developing countries is its own capital flow to developed countries, not the opposite.As mentioned above, the capital flow of developed countries to developing countries is some of the low technical content, such as labor -intensive capital.And developing countries are the best technical capital to develop developed countries.Developing countries bear the costs of many aspects such as environmental and human rights, but because they cannot attract or cannot retain high -quality capital, their economic development is still unsustainable.This is a vicious circle.

For China, the quantitative economic expansion has reached its peak, and the evasion of the middle income trap undoubtedly needs to rely on quality and economy, that is, rely on high -end capital and technology.As far as capital is concerned, China needs to form several high -end industrial chains, so that these industrial chains are regional and will not quickly lose due to changes in the external situation.The Pearl River Delta has formed a complete industrial chain, but has not been effectively improved, and has been maintained in labor -intensive technology.

Fortunately, Shenzhen is now forming a industrial chain with high -end technology and capital as the core, and spreads to the surrounding areas.If the entire Greater Bay Area, Hangzhou Bay, the Yangtze River Economic Belt, and Beijing -Tianjin -Hebei areas can form an industrial chain with its own characteristics, not only retaining its own high -quality capital, but also attracting high -quality foreign capital. It will undoubtedly help China to escape middle incomeTraps have become high -income economies and maintained at the economic level of stable development.

This requires cooperation between government and enterprises.Like other society, the government must handle the labor relationship and achieve a balance between the big cakes and the big cakes.For enterprises, the more important thing is the construction of the rule of law.Simply put, the rule of law is a order -based order.Whether it is technological innovation or intellectual property rights, whether it is the creation of wealth or protection, whether it is the expansion of capital or the flow, rules are required.

In any case, to escape the middle income trap and raise the economy to a developed level, the government may sink to the individual level of the enterprise to see what the enterprise needs?See if the country can do some useful things for enterprises?See what the country should not do to enterprises?Observation and thinking clearly, naturally have effective policies, and the middle income traps will automatically disappear.

(The author is a professor at the East Asia Research Institute of the National University of Singapore)

The article only represents personal point of view