EYE ON THE PRIZE

　　Over the past decades, China has achievedan economic growth miracle, particularlyin 2019, amid global economic slowdown,sluggish international trade growth andmounting downward pressure on the globaleconomy. Its steady GDP increase suggestsexpanding space for macroeconomic policy,declining debt ratio and enhancing domesticmarket attraction, which shows the country’srising role in boosting the global economy.

　　China’s GDP growth has been a nationwidefocus. Its economic aggregate surged from67.91 billion yuan ($9.8 billion at the currentexchange rate) in 1952 to 90.03 trillion yuan($13.6 trillion) by the end of 2018, increasingby 174 times, National Bureau of Statistics datashowed. In 2019, the Chinese economy maintainedstable growth and its GDP remained insecond place in the world at 99.09 trillion yuan($14.38 trillion), behind the U.S.

　　Li Daokui, Dean of the Institute for China’sEconomic Practice and Thinking at Tsinghua University, predicted that China will become ahigh-income country by about 2025 and willreach the average income level of high-incomecountries by 2049.

　　As categorized by the World Bank, theper-capita gross national income, roughly thesame as GDP, of high-income countries is setat $12,376. As for major economies such asthe U.S., Japan, Germany and France, it hasexceeded $40,000, with the U.S. at about$60,000. Italy has a per-capita GDP of $34,000,the lowest among the Group of Seven industrializednations. In comparison, China, whoseper-capita GDP topped the $10,000 mark in2019 for the fi rst time, is still a middle-incomecountry and the largest developing country inthe world.

　　Therefore, rationality is needed toachieve future goals, since the Chineseeconomy may either see rapid developmentor stagnate and fall into a “middle-incometrap” (MIT). This refers to a situation wherean economy is hampered by high wages andthe loss of its competitive edge, making itdiffi cult for it to continue to expand beyondthe middle-income range. Historically, somecountries have remained stagnant once theirper-capita GDP reached $10,000, experiencingcontinuous economic growth slowdown,such as Brazil and Russia. Only a few countries,like Japan and the Republic of Korea,have escaped the trap and joined the ranksof high-income countries.

　　Most countries fall into the MIT becauseexisting growth engines and developmentmodes have stopped working. Rising laborand land costs, a homogeneous industrialstructure and lack of technological innovationalso lead to economic growth slowdownand lack of competitiveness.

　　China is still facing many problems includinga declining working-age population and aweak economic foundation. It needs to furthereconomic restructuring and address unevendevelopment in different regions that has led toa widening gap in population and income distribution,while a number of impoverished peopleremain.

　　Moreover, per-capita GDP is associatedwith a country’s economic growth pace, whileper-capita income reflects people’s wellbeing.Since it is more important to improve thesense of gain of Chinese people than pursuehigh-speed economic growth, issues such aseducation, healthcare, welfare benefits, therule of law and cultural programs need moreattention.

　　Aware of these problems, China hascontinued to make breakthroughs. Over thepast year, there was a rising hi-tech sector,an upgrade from middle and lower reachesof the industrial chain to upper reaches, anda growing consumption market, which allsignaled new progress in China’s economicdevelopment.

　　Instead of focusing on a high GDP growthrate and whether and when China will becomea high-income country, more attention shouldbe paid to improving the industrial composition,the debt level and the resident income structure.

　　These efforts are essential to increasingthe quality and effi ciency of the economy andachieving high-quality growth, which are themain tasks today and in the future for laying asolid foundation.