By Wu Zhengyu & He Jianwu, Research Team on “Risk Prevention and Countermeasures in the Economic Transformation Period”, DRC

Research report No.183, 2017 (Total 5258) 2017-12-18

Abstract: Overcoming the middle-income trap is an important indication of China's realization of "double transformation", that is, the transformation from a planned economy to a market economy and from the expansion of quantity to the improvement of quality. It is also the major challenge facing China in the economic transformation period. The middle-income trap is harmful, and it will severely impact China's modernization. Due to multiple risks and insufficient prevention measures during the economic transformation period, China may fall into the middle-income trap. To overcome the middle income trap, we need to be alert to related risks such as economic deceleration, population aging and industrial hollowing-out. In order to prevent systematic risks, we must establish an early-warning system with relevant countermeasures for major crises, effectively release localized risks and insulate different types of risks so as to maintain a smooth macroeconomic performance. In addition, economic and social risks loomed up in development should be addressed through deepening reforms, and by taking the advantage of the swift economic development and policy portfolio.

Key words: middle-income trap, economic transformation, risk prevention